Chapter 17

Hedging Your Fund Bets

In This Chapter

arrow Understanding what hedge funds are

arrow Exploring the strategies that are available

arrow Checking out a fund of hedge funds

arrow Discovering some new ideas based on hedge funds

arrow Looking at some do’s and don’ts when investing in hedge funds

The reputation of hedge funds is appalling. I can’t put it a nicer way. It’s bad, terrible, dreadful. People blame hedge funds for almost everything, from the collapse of banks to the collapse of currencies to the collapse of jobs. And I’ve probably left out a few collapses. Additionally, many are unregulated and offshore, or if they’re subject to a rulebook, it’s a very slim one.

But although many make huge sums for their managers and investors, many also fail. You hear a lot less about the duds than the stellar performers. Hedge funds are very risky and about as far as you can get from a one-way bet to riches. Thousands fail every year, mostly in total obscurity, even secrecy. The majority make nothing for their ...

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