Hurdle Rates Definition What is a Hurdle Rate?

Hurdle Rate Definition


Hedge Fund Hurdle Rate Definition - What is a Hurdle Rate?Hurdle Rate Definition: The minimum return necessary for a hedge fund manager to start collecting incentive fees. The hurdle is usually tied to a benchmark rate such as Libor or the one-year Treasury bill rate plus a spread. If, for example, the manager sets a hurdle rate equal to 5%, and the fund returns 15%, incentive fees would only apply to the 10% above the hurdle rate.

Definition courtesy of HedgeCo

Additional Outside Hurdle Rate Resources:

Read more articles like this within the Hedge Fund Performance Category of this hedge fund blog.

- Richard

Subscribe To this Blog via Email Or RSS

Internal Articles Related to "Definition of Hurdle Rate":

1. Global Macro
2. Alternative Investments Outperform
3. Hedge Fund High Water Mark
4. Green Hedge Funds
5. Hedge Fund Blog Table of Contents

Permanent Link: Hedge Fund Hurdle Rate Definition - What is a Hurdle Rate?

Related Terms: Hurdle Rate, Hurdle Rates, What is a Hurdle Rate?, Definition of Hurdle Rates, Hurdle Rate Definition, Explanation of Hurdle Rate, Hurdle Rate Calculation, risk adjusted hurdle rate, hedge fund manager hurdle rate calculator

Top 10 Most Influential Hedge Fund Leaders in 2008

Top 10 Hedge Fund Leaders

Who are the most powerful hedge fund professionals in the industry?

Top 10 Most Influential Hedge Fund ProfessionalsI am currently my 1st annual poll to come up with a list of the top 10 most influential professionals within the hedge fund industry.

These could be hedge fund managers, regulatory professionals, consultants, fund of hedge fund leaders, etc. Please send me your suggestions on who you think should be on this top 10 list and I'll re-publish this post next quarter with the results of votes I receive through this hedge fund blog, my hedge fund forum (HedgeFundMessageBoard.com) and the Hedge Fund Group (HFG).

To nominate or vote for your top 10 selections please send an email to Richard@RichardCWilson.com with your list of names and 1 sentence on why you think they deserve to be included within the list. (and yes it is poor form to nominate yourself)
  1. (Please vote)
  2. Coming Soon...
  3. Coming Soon...
  4. Coming Soon...
  5. Coming Soon...
  6. Coming Soon...
  7. Coming Soon...
  8. Coming Soon...
  9. Coming Soon...
  10. Coming Soon...
- Richard

Subscribe To this Blog via Email | Or RSS

Related Articles:

1. Hedge Fund Group Seeing Rapid Growth
2. Top 10 Hedge Fund Trades of 2007
3. Top 10 Hedge Fund Books
4. Hedge Fund Fees
5. Green Hedge Funds
6. Hedge Fund Blog Table of Contents

Permanent Link: Top 10 Most Influential Hedge Fund Leaders

Picture courtesy of the Meltaylor Blog
Related Terms: Hedge Fund Managers, Hedge Fund Leaders, Top Hedge Funds, Leading Hedge Fund Professionals, Hedge Fund Consultants, Top Hedge Fund Advisers, Top Fund of Hedge Fund Groups, Top 10 Most Influential Hedge Fund Leaders in 2008

What Are Hedge Funds?

What Are Hedge Funds?

What Are Hedge Funds?I get a lot of questions such as What Are Hedge Funds? What do hedge funds invest in? or most often, Will A Hedge Fund Invest in My Company? Here is my answer to "What are Hedge Funds?"

A hedge fund is a private investment pool of capital which has few restrictions in what types of assets it can invest in. Hedge funds are often ran by a small team of experienced portfolio managers, traders and analysts. Hedge funds earn money by typically charging investors a 2% management fee plus 20% of positive returns past a set point which is often referred to as a hurdle rate. While the hedge funds you often here about in mainstream media are very large with over $10B in assets they represent only .5% of the total universe of well over 12,000 hedge funds. Here is a video on what is a hedge fund: http://richard-wilson.blogspot.com/2007/11/what-is-hedge-fund.html

- Richard

Subscribe To this Blog via Email Or RSS

Related Articles to "What Are Hedge Funds?":

1. What is a Hedge Fund? (Video)
2. Fund of Hedge Funds
3. How to Invest in Hedge Funds
4. Download Hedge Fund Blog Book
5. Hedge Fund Ethics

Permanent Link: What Are Hedge Funds?

Related Terms: What are hedge funds? What are Fund of Hedge Funds? What are Hedge Fund Managers? What are Hedge Funds Investing in?

Hedge Fund Interviews - Interview Questions

Hedge Fund Interview

Hedge Fund Interviews - Interview Questions

Hedge Fund Interviews - Interview Questions

Every couple of months I do a short interview with a investment blog. It usually involves a short phone call or email exchange over some take out rather than the type of hype seen here in the picture to the left, but it is fun none the less. Thanks to TheAge for the picture. Here is the interview:

Thank you for participating in the 2nd “insider’s” interview. The goal of this series is to pick the brains of insiders who deal with the business of money and to try to dig beyond the headlines. Tell me a little about yourself and what you do?

My name is Richard Wilson and I am a hedge fund consultant and founder of the Hedge Fund Group (HFG). I work for a third party marketing firm and our job is to find new investors for unique and top performing hedge fund managers. We look at over 300 hedge funds a year, sift through those, and then work with around 1% of those for 3-5 years at a time.

As a pretense to everything else said in this interview I just want to make it clear that I’m not a financial advisor and nothing I write about here or in my blog should be taken as financial advice, guidance or recommendations. I simply write about hedge funds and enjoy networking with wealth advisors, family offices and institutional consultants.

Hedge funds are perhaps one of the most misunderstood investing products in the market today. Some believe they are controlled by a Connecticut based cabel manipulating the financial markets. Others think they are the greatest thing since sliced bread. Let’s try to demystify the product and industry. What is a hedge fund?

A hedge fund is a private investment pool of capital which has few restrictions in what types of assets it can invest in. Hedge funds are often ran by a small team of experienced portfolio managers, traders and analysts. Hedge funds earn money by typically charging investors a 2% management fee plus 20% of positive returns past a set point which is often referred to as a hurdle rate. While the hedge funds you often here about in mainstream media are very large with over $10B in assets they represent only .5% of the total universe of well over 12,000 hedge funds. Here is a video on what is a hedge fund: http://richard-wilson.blogspot.com/2007/11/what-is-hedge-fund.html

Who ideally is best suit to investing in hedge funds?

Well, in the United States you have to be an accredited investor to invest in hedge funds. If you are an accredited investor than those with a large enough portfolio and enough financial knowledge or guidance from a financial planner are potential good fits for hedge funds. That is a broad statement because once you take the time to start looking at the 10,000 hedge fund products you’ll find low, moderate and high risk options that use vastly different investment strategies and a range of assets from collecting art, buying real estate or using a very sophisticated quantitative model to buy and sell options. There are really several hundred hedge fund strategies to pick through, that is why the real prerequisite is simply taking the time to figure out which might work best for your situation.

If hedge funds are only suited for accredited investors and, thus, by definition, open to 10% of the population at most why the disproportionate amount of the media attention?

While hedge funds are only open to 10% of the general population almost any institution can invest in hedge funds. Endowments, foundations and pension plans all have access to these types of products if they wish to use them for managing their own portfolios. For example, there are over 450,000 foundations in the United States, while many do not use hedge funds a percentage of them do and each group’s assets are generally many times the size of the portfolio of an individual. In aggregate these institutional assets add up quickly. Over the last 5 years institutions have typically been allocating 6-12% of their portfolios to hedge funds or alternative investments (generally private equity and hedge funds). Now the trend is to start allocating 12-20% of their total portfolio to hedge fund managers and alternative investment options.

The short answer is that hedge funds make up a large percentage of the equity trades each day within the stock market and are often involved in activist proxy battles and takeover attempts that seem to make the headlines on a weekly basis nowdays.

For those who are accredited investors and what exposure to hedge funds, what is the ideal percentage of one’s portfolio that should be invested in hedge funds?

I can’t make this type of recommendation since it comes to close to providing financial advice, but every major publication has recently disclosed that institutions have been gearing up to allocate 12-20% of their portfolio to hedge funds and alternative investments. This could or could not be too aggressive for an individual; it really depends on your situation in terms of both age and level of assets.

I know you can’t answer for your entire industry but do you have any comments to the criticism that the hedge fund community unnecessarily focuses on short term gains (because a large portion of its compensation is based on annual profit) sometimes to the detriment of publicly traded companies? For example, two hedge funds publicly lobbied for the merger of TD Ameritrade and E*Trade against the wishes of management. It was perceived by some columnists that the lobbying was to create a short term gain in share price. Of course, we all subsequently found out that E*Trade had significant exposure to subprime mortgages.

While some hedge funds are pushing for short-term performance most are shooting for long-term returns. Anyone who has been in the industry for more than 3-5 years know that sophisticated and un-sophisticated investors alike don’t really take a hedge fund manager seriously until they have 5-7 or even 10 years of a track record of running money. If you shoot only for short-term returns you are dead. Hedge funds do try to make money though, that’s how they earn their out-sized bonuses each year.

I think the real question is why are so many people invested in mutual funds? If you could manage equities for a mutual fund for $400,000 a year or manage equities for a hedge fund for $5 million a year where do you think the majority of talent is going to flow? It is like playing basketball professionally in Canada or being on a team in the NBA. The talent flows to where the money is. Also, the reason why good stock pickers can make more money at a hedge fund is that the interests of hedge funds are aligned with their investors...hedge funds typically take a 2% base fee and 20% of upside performance. 90% of profits are usually made off of that 20% upside performance and that just doesn’t exist in the world of mutual funds. Mutual fund managers and companies in general earn money based on total assets under management.

Do you believe that the negative publicity of the industry is self-inflicted? The community clusters in a relatively remote (albeit really nice) part of the country, rarely speaks public except to grill board of directors (whether justified or not, the public statements have a negative tone to them).

I believe it is SEC inflicted. Hedge funds are restricted by current laws not to do any marketing or sales. Most hedge funds avoid all media contact and public exposure in general. The reason why you only hear them grill boards of directors and nothing else is because as public companies that information has to be made public. This is partially why I keep writing in my blog, hedge fund managers can’t write much to the public on their own industry and the WSJ and NY Times like to either focus on activist hedge funds or draw conclusions on the hedge fund industry as a whole based on what the 10 largest hedge fund managers are doing. There are 10,000 hedge funds out there now, 60% of what you read in mainstream media is not true for the vast majority of those hedge fund managers.

Financial Times wrote an article [http://www.ft.com/cms/s/0/254c0b62-cdc5-11dc-9e4e-000077b07658.html?nclick_check=1] commenting that it was the banks and not the hedge funds that were affected by market shocks. The implication of the column was that hedge funds, which are typically managed by few key decision makers and not committees, had structural advantages to other institutions. As hedge funds get larger and larger, will there be a reversion to means for hedge funds?

I love that article, it’s a great opinion piece on how hedge funds have faired vs. banks in the recent market turmoil. I think it is true that hedge funds are leaner, more profit driven and hungry than large banks who need four levels of approval to expense their lunch. To your point on reversion to the mean as hedge funds grow, I think we are already there now with over 10,000 funds. In this case I think that overall returns might return more to average as the number of hedge fund managers grow, but I think we are a long way off from having more than a handful of hedge funds build in the type of lethargy you find in large banks. A side note to that, most hedge funds weren’t directly impacted by the sub-prime meltdown.

Every industry has its excesses. If you had to name one for the hedge fund industry what would it be?

Besides the total number of hedge fund managers possibly approaching excess, I would say base management fees run high. They are typically 2% of total funds managed and I think that should come down to 1 or 1.25% or hopefully 0. If you are out there to make money for your investors than take it to the next level and only charge for positive performance.

Let’s take about careers. There’s increasing talk that the future in sell side is limited and the place to be is buy side (for definitional purposes, sell side are the retail brokers who sell securities; whereas buy-side refers to the portion of the financial industry, such as pension funds, who buy assets and manage them). If someone wanted to start a career on the buy-side, what are 3 pieces of advice you would give them?

  1. The day you graduate from college start studying for and earning your Chartered Financial Analyst (CFA) designation.
  2. Never do anything un-ethical. If you are sharp and passionate you have no need to ever cut corners. Avoid people that do like the plague.
  3. Do you own compliance and due diligence research. Look up your potential or current boss within the FINRA or SEC records to see if they have marks against them. Meet with a compliance lawyer yourself to make sure your activities are all legal with securities laws. Do your own homework because many times nobody is going to do it for you.

As usual, here’s your opportunity to plug your blog and your new book.

If anyone has more questions regarding hedge funds they can email me directly at Richard@RichardCWilson.com or read through some of the 250 hedge fund articles within my blog at http://richard-wilson.blogspot.com/. If you hate clicking dozens of times to read multiple hedge fund articles my free hedge fund blog book can also be downloaded at http://hedgefundsbook.com/.

Thanks for your time Richard.

Thank you.

Read more articles like this within the Hedge Fund Performance Category of this hedge fund blog.

- Richard

Subscribe To this Blog via Email Or RSS

Related Articles to "Hedge Fund Interviews - Interview Questions":

1. What is a Hedge Fund?
2. Hedge Fund Strategies
3. Hedge Fund Investments
4. European Expert Networks for Hedge Funds
5. Top Hedge Funds

Permanent Link: Hedge Fund Interviews - Interview Questions

Related Terms: Hedge Fund Interviews, Interview Questions, hedge fund job interview,hedge fund manager interview

Hedge Fund Advertising

Hedge Fund Advertising

Hedge Fund Advertising Options

This website is now accepting relevant hedge fund advertising profiles and articles. All advertising must be directly related to hedge funds. To set up an advertisement on this hedge fund blog please email Richard at Richard@HedgeFundGroup.org or read below for more details.

One current advertising client consistently gets 900-1,000 targeted visitors/month through this hedge fund blog. Another sent me this testimonial earlier today (6.3.08):

Hedge Fund Advertising, Hedge Fund Advertisement"I have spent a ton of money over the years on advertising on certain sites: HFM, Hedegco.net, Hedgeworld, Barclays, and Fin alternatives. Richard Wilson’s blog really targets my audience that I’m looking for. I have made more contacts and possible leads from his blog and website then from all my advertising combined over the last 3 years. Also, if you Google Search for the blog or site it comes up really high on searches. Which is very important when Hedge Funds are looking for our services. The blog really focuses on the Alternative universe. It’s a very good investment."

Hedge Fund Advertising Solutions Available
  • HedgeFundBlogger.com Site Sponsorship - $800/month (120 x 30 banner ad on all pages)
  • Hedge Fund Service Provider Directory Listings $99-$399/month
  • Press Release Publishing $333/release
  • Sponsored Niche Article Publishing (Search Engine Optimized) $99-199/month
  • If you would like to explore partnerships or advertising on my hedge fund blog please just send me a short email at Richard@HedgeFundGroup.org.
Example of 120 x 30 blog sponsor advertisement


Website Details
  • 10,250+ pageviews per business day
  • Daily hedge fund newsletter goes out to 12,000 individuals
  • 1,700+ articles on hedge funds
  • Targeted niche topic placements and search engine placement available
  • Website is often visited by the more than 13,500 members of the Hedge Fund Group (HFG)

Example Hedge Fund Advertisements

Richard Wilson
Hedge Fund Consultant & Blogger
Richard@HedgeFundGroup.Org
Mobile #: 503.789.7901

Related Link: Hedge Fund Services Directory
Permanent Link: Hedge Fund Advertising

Tags: Hedge Funds Advertising, Hedge Fund Industry Advertising Publications, hedge fund advertising, hedge fund advertisement, Hedge Fund Industry Advertising Publications, hedge fund media

Kurtosis Definition & Explanation

Kurtosis Definition

A definition and explanation of Kurtosis

definition and explanation of KurtosisTodays thrilling blog post is on Kurtosis! While maybe not as dramatic to read about as Clinton bashing hedge funds you can often find Kurtosis statistics within hedge fund analytics reports. It is important to get rough feel for what it means because it can help evaluate the distribution of variance in returns or whatever set of data you are analyzing.

Kurtosis Definition: In probability theory and statistics, kurtosis (from the Greek word kurtos, meaning bulging) is a measure of the "peakedness" of the probability distribution of a real-valued random variable. Higher kurtosis means more of the variance is due to infrequent extreme deviations, as opposed to frequent modestly-sized deviations.

Definition paragraph courtesy of Wikipedia

If you would like to see this used within a hedge fund white paper, here is a report on "The Problems With Extreme Hedge Fund Returns" which references kurtosis within the discussion.

- Richard

Subscribe To this Blog via Email | Or RSS

Articles Related to "Kurtosis Definition & Explanation"

1. Prime Broker Definition
2. Risk Arbitrage Hedge Fund Strategy
3. Treynor Ratio
4. Warrant Arbitrage
5. Zero Coupon Bonds

Permanent Link: Kurtosis Definition & Explanation

Related Terms: Kurtosis Definition & Explanation, Kurtosis Statistical Calculation, Kurtosis Figure, What is Kurtosis, Define Kurtosis

Hedge Fund Listings

Hedge Fund Listings


Important Note
: This is not a up-to-date list, complete list or recommended list of hedge funds. It is simply a list put together by Investment Seek that I would like to reference here in hopes of aggregating these types of publicly available listings of hedge funds.

A

B

C




  • Camden Asset Management
    St. Albans Partners, Barnet Partners, Yield Strategies Fund I, Yield Strategies Fund II



  • Camelot Management



  • Campbell & Co.
    Financial, Metal, and Energy Large Portfolio



  • Cantillon Capital Management
    Cantillon World, Cantillon Europe, Cantillon, U.S. Low Volatility, Cantillon Technology, Cantillon Pacific



  • Cardinal Fund Management
    distressed securities, risk arbitrage



  • Carlson Capital
    Double Black Diamond, Black Diamond, Black Diamond Relative Value, Black Diamond Arbitrage, Black Diamond European



  • Cartesian Capital Partners (United Kingdom)



  • Catrock Capital Management
    Specializes in in High Yield and Distressed Fixed Income



  • Caxton Associates
    Caxton Global Investments



  • Cerberus Capital Management
    Hoover's Profile
    Cerberus International, Cerberus Partners, Styx International, Styx Partners, Long Horizons Fund Series Two



  • Chapman Capital



  • Chelsey Capital



  • Cheyne Capital Management (United Kingdom)
    Specializes in Convertible Securities, Credit, Equities, Event-Driven Investing, Investment Grade Credit Default Obligations (CDOs) and Asset-Backed Securities (ABS).



  • Chilton Investment Company



  • Citadel Investment Group
    BusinessWeek Profile - Hoover's Profile - Yahoo! Profile
    Kensington Global Strategies, Wellington Partners



  • Clareville Capital (United Kingdom)



  • Clinton Group
    Hoover's Profile
    Clinton Multistrategy, Trinity, Clinton Global Fixed-Income, Clinton Arbitrage, and Clinton Riverside.



  • Coast Asset Management
    Fixed Income Arbitrage, Multi-Manager Portfolio Management, and Credit Spread Strategies



  • Cobalt Capital Management



  • Context Capital Management



  • Convexity Capital



  • CooperNeff - subsidiary of BNP Paribas



  • Copper River



  • Corymb Capital



  • CQS Management (United Kingdom)
    CQS Capital Structure Arbitrage, CQS Convertible & Quantitative Strategies



  • CPR Alternative Asset Management (France)
    Subsidiary of Credit Agricole Indosuez
    LibertyView Statistical Arbitrage Fund



  • Crescendo Partners


D



E




  • Eastbourne



  • Eco-Vest Advisors
    Offers portfolio management and investment services focused on all aspects of environmental and socially responsible investing, customized to meet our clients overall risk tolerance and investment objectives.



  • Efessiou Group



  • Egerton Capital (United Kingdom)
    Egerton European Dollar Fund, Egerton European Equity Fund, Egerton Capital Partners



  • EGM Capital



  • Elliott Management
    Firm Profile
    Elliott Associates, Elliott International



  • Emergent Asset Management (United Kingdom)



  • Emerging Value Asset Management



  • Eminence Capital



  • EN Benten Asset Management (United Kingdom)



  • EnTrust Capital



  • Equinox Management Partners



  • ESL Investments



  • Eton Park Capital Management



  • Exis Capital


F



G



H



I



J



K



L



M




  • Magnetar Capital



  • Man Investments (United Kingdom)
    Man AHL Diversified, Man AHL Alpha, Athena Guaranteed Futures



  • Marathon Asset Management
    Marathon Special Opportunity, Marathon Master, Marathon Global Convertible, Marathon Structured Finance, Marathon Real Estate Opportunity



  • Mariner Investment Group
    Mariner Partners/Mariner Atlantic, Caspian Capital Partners, Mariner Voyager, Mariner Opportunities



  • Marshall Wace Asset Management
    Eureka Funds (Long-Short Equity), Affinium



  • MatlinPatterson Asset Management
    MatlinPatterson Global Opportunities



  • Matthes Capital Management



  • Maven Capital Management (United Kingdom)



  • Maverick Capital



  • Mellon HBV Alternative Strategies
    Specializes in single manager event-driven hedge fund strategies at the lower-risk end of the hedge fund spectrum.



  • Merlin BioMed Group



  • Merrill Lynch Investment Managers - [Firm Profile]



  • Millennium International Management



  • Mondiale Asset Management (Canada)



  • Moore Capital Management
    Moore Global Investment, Moore Global Fixed Income, Remington Investment Strategies, Moore Emerging Markets, Moore Credit



  • Mortar Rock Capital Management


N



O



P



Q



R



S



T



U



V



W



Y



  • York Capital Management
    York Investment, York Select, York Capital Management, York Global Value Partners, York Credit Opportunities

Z

  • Zweig-DiMenna Associates
List Source: Investment Seek

- Richard

Related Articles:

  1. Hedge Fund Litigation Funding List
  2. Top 100 Hedge Funds
  3. Top 50 US Hedge Fund Groups
  4. Sovereign Wealth Fund Lists
  5. Hedge Fund List

    Permanent Link: Hedge Fund Listings
    Related Terms: Hedge Fund Capital Management, Hedge Fund Lists, Hedge Fund Listing

Hedge Fund Videos | 30+ Free Videos on Hedge Funds