In the News
Kurt Schacht, CFA, managing director of Standards and Financial Market Integrity at CFA Institute, talks with Greenwich Roundtable President Stephen McMenamin on the current state of the hedge fund industry. McMenamin, whose organization is a leading proponent of industry best practices and due diligence, discusses the pressures on managers to take on extra risk, hedge fund fees, and the overall value proposition involved in hedge fund products.
A nonprofit group's guide to spotting danger signs at hedge funds.
Understanding volatility, leverage and liquidity and knowing how these factors together can compound risk, can help investors know what they own and how it behaves. Ongoing due diligence, manager monitoring, and stress testing and projections with various scenarious can also help avoid unpleasant surprises.
Large endowments and wealthier investors have the funding available to hire staffers who understand the complexities of alternative investments. Good returns on alternative investments, which include hedge funds and private equity, are mostly borne out of a commitment to due diligence.
Ask the questions and then trust your gut instinct, say the authors of Greenwich Roundtable White Paper.
People buy nontraditional assets to diversify their stock and bond portfolios, the goal being to lower volatility, lessen losses and improve overall results. Some invest in gold or currencies, or put their money in real estate. But these don't usually act like stocks and bonds and cash equivalents, the traditional investor assets.