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moneysense.ca, 31/05/05
Should I Buy a Hedge Fund?
Hedge funds, private pools of money usually marketed to wealthy individuals and employing aggressive investing strategies like short selling, leverage, derivatives etc., are attracting a lot of new money these days. However, I am staying away from these funds for the following reasons:
- I mostly own stocks and ETFs, which are fractional interests in real businesses. I don’t understand exactly what I own in a hedge fund.
- The hedge fund industry is poorly regulated and has minimal disclosure requirements. It has a high fee structure, typically 2% of assets and 20% of the fund’s profit as “performance fees”. I just don’t understand why I should put up the capital and assume the risk and a fund manager gets a piece of the profits.
- Hedge funds have large minimum requirements that are larger than our current investment portfolios.
The Globe and Mail newspaper ran a series of stories on hedge funds available here, here, here and here.
moneysense.ca, 31/05/05
If you want inside look in hedge fund read “Running Money : Hedge Fund Honchos, Monster Markets, and My Hunt for the Big Score” by Andy Kessler (as well as his other great book, “Wall Street Meat: Jack Grubman, Frank Quattrone, Mary Meeker, Henry Blodget and me”). Very nice view of hedge funds.
In regards to the ETFs, I am looking at getting into those, specifically iFunds. My current self-directed RRSP account is with Altamira where I can’t buy iFunds so I am looking at changing. Just wondering who your account is with and if you are happy with them.
Alex: Thanks for the book tips. I will check both books out at my local library.
AKG: I think you mean iUnits which are traded on the TSX or iShares which are traded in US markets. You can buy them with a self-directed brokerage account that lets you buy stocks. I have our accounts with Action Direct. They are okay, nothing great, but then I only make a few trades a year. All the big banks have discount brokerage arms and you can just pick one that is most convenient for you.
You are right,they are the iUnits. And although my Altamira account lets me buy stocks, I can’t get these through them. I will check again. I just had a quick look. Finally dumped the Nortel in my account. Don’t ask!
If you have iUnits in your Action Direct account you can participate DRIP program for 9 of them (check for more info on iUnit website).
Thanks Alex, I will check that out.
Susan
Alex Givant Said:
> If you have iUnits in your Action Direct account
> you can participate DRIP program for 9 of them
Does anyone know whether Action Direct will DRIP other ETFs (iShares, VIPERs, etc.)?
Is there a list?
Thank you.