The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

Notes

¹ “From Infamy to Fame—The Rapidly Changing Landscape of the Hedge Fund Industry,” Advent Client News, Advent Software, Inc. (2nd Quarter 2002): 1.

² The President's Working Group on Financial Markets, Hedge Funds, Leverage, and the Lessons of Long Term Capital Management, 1999.

³ I am indebted to James Grant, an infinitely provocative financial writer and investor, for this description of Jones's hedge fund, A.W. Jones & Co. James Grant, “Yes, But,” Forbes (June 10, 2002): 220.

⁴ Of course, many of the securities purchased by hedge funds are highly illiquid. Because a hedge fund manager deals in marketable securities, that doesn't mean that his portfolio can be accurately marked-to-market every day.

⁵ Event-driven hedge funds also invest in other special situations that are expected to dramatically change the financial or operating conditions of a firm.

⁶ “Alpha” is simply a measure of risk-adjusted return.

⁷ “While one must admit there are capacity issues in some sectors, a careful strategy-by-strategy review suggests this is not a concern for the bulk of the hedge fund industry.” R. McFall Lamm, Jr. and Tanya E. Ghaleb-Harter, An Update on Hedge Fund Performance: Is a Bubble Developing? Deutsche Asset Management research monograph (September 1, 2001): 3.

⁸ Interested investors may also wish to look into Simon Lack's controversial attack on the hedge fund industry, The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True (New York: John Wiley & ...