Does anyone have experience with hedge funds?

pw23

I have previously traded small amounts under 3K in UK equities on the stock market and never Invested in hedge funds as I didn't think I'd have enough to invest

I'm curious if anyone has invested money into hedge or mutual funds and how was the experience?
how did you compare and select which financial organisation and eventually product to invest in?

I acknowledge the high risk involved, you could lose it all and it would be institution managing and picking stocks/investments. I would hope my  chances of making a profit are considerably  greater than me doing it.
I did read the money needs to be tied up for a minimum of a year, which is fine by me

I have £30k to invest, is it enough?

dunstonh

If you start going into very high risk areas like hedge funds (which are off the conventional risk scale), then typically you need to be able to afford full loss and those that use them typically invest no more than 5% of their investible wealth into those sorts of things.

Eyeful

Hedge funds also have high management fees. Many of them (if not all) also have the management take something like 20% of the profits of the fund.
This basically means that the share holders take all of the risk but not all of the profit, while the management take a large chunk of the profit and not much risk.  If there is no profit, the management still take a large yearly management fee.  You can see why hedge fund managers like the arrangement & become extremely rich.

I think these hedge fund are aimed at HNW persons. I doubt your £30k would qualify for entrance into these funds.

These are some of the helpers, Warren Buffet alluded to in his famous " The Gotrocks Family Story". See below!
I suggest you take the time to read it 
https://catalogimages.wiley.com/images/db/pdf/9781119404507.excerpt.pdf
 

 

DavidT67

"shops where they don't have prices."

Once went to a Michelin starred restaurant in Rome, where the Ladies' menu didn't have prices, only the Gentlemens', that didn't go down well with the spouse !

Linton

pw23 said:

I have previously traded small amounts under 3K in UK equities on the stock market and never Invested in hedge funds as I didn't think I'd have enough to invest

I'm curious if anyone has invested money into hedge or mutual funds and how was the experience?
how did you compare and select which financial organisation and eventually product to invest in?

I acknowledge the high risk involved, you could lose it all and it would be institution managing and picking stocks/investments. I would hope my  chances of making a profit are considerably  greater than me doing it.
I did read the money needs to be tied up for a minimum of a year, which is fine by me

I have £30k to invest, is it enough?"

Hedge funds are very different to mutual funds.  Must investors use the latter.  They are much safer than investing in single shares as 1 share going bust could lose you all your money whereas mutual funds may invest in unhdreds or thousands of individual shares so barring the end of the world you cannot lose all your money.  Mutual funds are widely available.

I dont think there is a clear definition of "hedge funds".  They are typically used by a relatively small group of wealthy people to invest at high risk in non-mainstream opportunities with the hope of getting very high returns.  They are not  available to the general public.

leosayer

Hedge funds is a vague umbrella term for collective investment schemes (ie. funds) that have one or many of these features: high charges including performance fees, domicile in 'offshore' jurisdictions with a more lax regulatory and tax regime, undertake complex and risky investment strategies, use leverage to magnify gains (and losses), require minimum investments sometimes in the millions and have limited investment and redemption opportunities.

I can see no reason why a retail investor would bother with them because they won't have the protections available or be eligible for the tax advantages that retail investors get via ISAs and Pensions. 

If you want to invest in funds (which the vast majority of retail investors do) then go onto one of the many investor platforms such as AJ Bell, II, Hargreaves etc and search the list of funds they have available. This won't include hedge funds because they can't be marketed to UK retails investors - for their own protection because they fall outside the UK/EU regulatory regime.

poseidon1

https://www.unbiased.co.uk/discover/personal-finance/savings-investing/what-is-a-hedge-fund-and-how-do-they-work

See above link to a useful article on hedge funds.

In all likelihood if you are not HNW or more likely  UHNW , you do not meet the 'accredited investor' criteria to qualify for entry into the hedge fund investment world.

 In my previous career, clients who dabbled in hedge fund investing were all multi millionaires, investing a minimum of £100k and prepared to lose their entire stake without fear this would materially effect their net worth.

Having said the above, UK hedge funds are regulated and for those who meet the criteria and have the requisite appetite for risk ( ie can tolerate a total loss of their stake ),  the potential for outsized returns might be worth considering.

As others have pointed out, you would best advised to focus and learn more about UK collective investments for retail investors such as Unit Trusts, ETFs and even Investment Trusts. These are much more suitable for individuals in your circumstances who are progressing from saving to investing.

Eyeful

OP.
If you really want to invest instead of trade,
I suggest that you first watch this video:      https://www.kroijer.com/
Read this: https://monevator.com/passive-fund-of-funds-the-rivals/
Then look into something like:
https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/#balanced

If you have a high risk appetite look into a low cost passive Global Index Fund or ETF.

If you do invest, the longer the better (say at least 19 years)