The Hedge Funds Book: How to Invest in Hedge Funds & Earn High Rates of Return Safely

Overview

Money managers  have traditionally used hedge funds as they would mutual funds: to pool investors’  money and place it in financial instruments in an effort to make a high positive return. Hedge funds have typically been available only to the affluent or to investors with inside contacts, but today that has changed. Almost any investor can now participate in a hedge fund and earn those high returns.

Hedge funds saw a 20 percent increase in one recent year, posting the ...

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Overview

Money managers  have traditionally used hedge funds as they would mutual funds: to pool investors’  money and place it in financial instruments in an effort to make a high positive return. Hedge funds have typically been available only to the affluent or to investors with inside contacts, but today that has changed. Almost any investor can now participate in a hedge fund and earn those high returns.

Hedge funds saw a 20 percent increase in one recent year, posting the strongest gain in a decade and installing confidence back in investors. If the pace continues, hedge fund trading will far outpace all other investments. However, you must know what you are doing. The Hedge Funds Book will detail how to invest in hedge funds, evaluate  their performance, and employ investing strategies  and tactics using the latest technology to set up your account online and see the biggest returns. You will be able to handle fees, taxes, and risks, and you will get little known data to help you double or even triple your investment — all while avoiding the common traps and pitfalls.

Instruction is great, but advice from experts is even better, and the experts chronicled in this book are earning millions. Aside from learning the basics of hedge fund trading, you will be privy to investors’ closed club secrets and proven successful  ideas. If you are interested  in learning  everything there is to know about hedge fund investing along with hundreds of hints, tips, and strategies to minimize your risk and maximize your return, this book is for you.

Atlantic Publishing is a small, independent publishing company based in Ocala, Florida. Founded over twenty years ago in the company president’s garage, Atlantic Publishing has grown to become a renowned resource for non-fiction books. Today, over 450 titles are in print covering subjects such as small business, healthy living, management, finance, careers, and real estate. Atlantic Publishing prides itself on producing award winning, high-quality manuals that give readers up-to-date, pertinent information, real-world examples, and case studies with expert advice. Every book has resources, contact information, and web sites of the products or companies discussed.

This Atlantic Publishing eBook was professionally written, edited, fact checked, proofed and designed. The print version of this book is 290 pages and you receive exactly the same content. Over the years our books have won dozens of book awards for content, cover design and interior design including the prestigious Benjamin Franklin award for excellence in publishing. We are proud of the high quality of our books and hope you will enjoy this eBook version.

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Product Details

  • ISBN-13: 9781601380005
  • Publisher: Atlantic Publishing Group Inc.
  • Publication date: 6/1/2010
  • Pages: 288
  • Product dimensions: 5.90 (w) x 8.90 (h) x 0.80 (d)

Meet the Author

President, IVP Management LLC, General Partner, Capital Preservation Fund L.P., www.CapitalPreserver.com
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Table of Contents

Foreword 13

Introduction 17

Chapter 1 The Basics of Hedge Funds 19

What Are Hedge Funds? 19

Regulation 24

The Role of Aggression 29

The History of Hedge Funds 31

Hedge Fund Structure 38

Hedge Fund Operations 40

Qualifications for Hedge Fund Investors 45

Modern Portfolio Theory 49

Chapter 2 Hedge Fund Alternatives 57

Alternatives to Hedge Funds 57

Chapter 3 Hedge Fund Fundamentals 71

Stocks 73

Bonds 75

Cash and Cash Equivalents 78

Real Estate 80

Commodities 83

Derivatives 86

Options 87

Warrants and Convertible Bonds 90

Futures 91

Forward Contracts 93

Swap 94

Payment-in-Kind Bonds 95

CMOs and Tranches 95

Viaticals 96

Chapter 4 Hedge Fund Tools and Methods 101

The Basics 102

Financial Analysis 113

Types of Hedge Funds 119

Chapter 5 Hedge Fund Strategies 123

Equity Hedge Funds 124

Dedicated Short Bias 131

Fixed-Income Directional 132

Convertible Arbitrage 132

Capital-Structure Arbitrage 136

Fixed-Income Arbitrage 137

Event-Driven Risk Arbitrage 138

Distressed Securities 141

Event-Driven Multi-Strategy 143

Index Arbitrage 148

Liquidation Arbitrage 149

Merger Arbitrage 150

Option Arbitrage 151

Pairs Trading Arbitrage 153

Scalping Arbitrage 154

Statistical Arbitrage 155

Warrant Arbitrage 155

Non-Directional 156

Global Macro 163

Emerging Markets 166

Managed Futures 166

Property 167

Multi-Strategy 168

Fund of Hedge Funds 169

Chapter 6 Hedge Fund Performance 177

Results 177

Credit Suisse/Tremont Hedge Fund Index 179

Risks 181

Further Resources 182

Chapter 7 Hedge Fund Techniques for Individual Investors 183

The Position of the Individual 183

Safer Investing 186

Risks 190

What About Mutual Funds? 193

Exchange Traded Funds Can Work 197

Chapter 8 Assembling a Portfolio as an Individual Investor 203

Assess Your Funding Needs 208

Chapter 9 Making the Commitment 213

Finding Out More 214

The Paperwork 215

Asking Questions 216

Avoiding Problems 217

Investigations 219

How to Open a Hedge Fund Account 221

How Hedge Funds Get Known 222

What Sort of Client Are You? 223

Chapter 10 Tax Issues 225

Investor Taxes 225

Types of Returns 226

Foreign Interests 229

Hedge Fund Tax Treatment 230

Offshore Hedge Funds 233

Chapter 11 How to Work for a Hedge Fund 237

Lawyer 238

Accountant 241

Broker 242

Administrator 244

Marketer 246

Hedge Fund Manager 247

Chapter 12 The Future of Hedge Funds 251

Glossary of Terms 255

Bibliography 281

Author Biography 283

Index 285

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Sort by: Showing all of 3 Customer Reviews
  • Posted May 2, 2010

    more from this reviewer

    Hedge Funds explained

    The premise of this book is to invest, get high returns and do it safely. This book is perfect for a miser like me. I'm not a gambler at all but investing can be such a great way to make money, if you're smart about it. I was really hoping this would make an investor out of me. Maybe I'm too much of a layperson because I can't say that now having read the book I could go out and give a fund manager a run for his money. The approach seems to attempt to speak to others like me who are not investing pros without a base knowledge of investing. But I can't say he did the best job fleshing out the esoteric concepts. Sometimes it seemed that the author was circling his point without actually getting there.

    Something I found odd is right away the author tells you in the introduction that you will need a certain amount of wealth to be able to invest and withstand a loss. I thought the point was to make safe investments so that you didn't need to worry about a loss? But maybe that's my ignorance coming out, any investment is a risk. I guess I had hoped this book would give me some kind of guarantee against risk. The author clearly says more than once that even hedge funds are not risk free.

    On the plus side, there were some aspects that helped me make sense of investing. I especially like that this book was written after our economy took a nosedive in 2008. I didn't want to read advice from an era that didn't count anymore. The case studies helped a lot. I'm definitely a layman when it comes to investing and I liked that there were a lot of current examples that I recognized like Bernie Madoff's ponzi scheme and the "Cash for Clunkers" program.

    Overall, if you're looking for information on hedge funds, this isn't a bad buy. It wasn't as dry as I was expecting but having some kind of prior knowledge about investing would definitely help while reading this one.

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  • Posted April 6, 2010

    For Investors and Animal Lovers

    While hedge funds are typically for those with a high annual income or wealth to spare, the Hedge Funds Book is a valuable source for anyone interested in investing. The easy to understand guide breaks down a complicated topic into easily digestible sections, clear bullet points, and interesting case studies. For those who struggle with financial lingo, such as myself, a glossary of various terms is located in the back of the book.
    The highly experienced author, Alan Northcott, covers both the basics of hedge funds and the more complex issues of strategies and assembling a portfolio. For readers who prefer visual learning, Northcott offers charts for topics such as the alternatives to hedge funds. In addition to investing, this book touches upon the various opportunities to work for a hedge fund including areas such as accounting, marketing, and management. For readers who are extremely reluctant to read a financial book, it may warm your heart to know that a portion of book's profits are donated to the Humane Society of the United States. While I am in no position to invest in a hedge fund at this time, I have a soft spot for animals, and I strongly believe in donating to non-profits whenever possible.

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  • Posted March 3, 2010

    Informative Book is Helpful to All Investors

    This book, "How to Invest in Hedge Funds And Earn High Rates of Return Safely," shares insight into various different aspects of hedge funds, beginning with providing a basic understanding of what hedge funds are and the types of investments they involve. It goes on to discuss hedge fund alternatives such as mutual funds for less-than-wealthy investors, fundamentals of investing, tools and methods for investing, and strategies for overcoming risks top achieve a high rate of return for your investment.
    I appreciated the fact that the author, Alan Northcott, emphasized hedge fund performance and risk management in such a straightforward way. After reading this book, even a beginning individual investor or business owner might understand how to assess risks associated with this type of investment-before investing large sums of money.
    The informative book is a good choice for a wealthy financier who is capable of making the type of investment required by hedge funds, but wishes to learn how to avoid associated risks; it is also a must-read for beginning investors who wants to discover how to make good choices with similar investment opportunities and build a strong portfolio.

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