Choosing the Right Hedge Fund

Hedge Fund pic

Hedge Fund
Image: investopedia.com

A partner at BlueMountain Capital Management, Bill Reeves of Hawaii has spent nearly two decades as an executive in the finance industry. Bill Reeves of Hawaii served as the head of macro strategy and trading at JP Morgan and co-founded BlueCrest Capital Management, a New York-based hedge fund that grew into the third-biggest hedge fund firm in Europe.

As investors look for the right hedge fund, they need to consider the minimum investment that each hedge fund needs. Most hedge funds are designed for high-net-worth individuals or institutions, so the minimum investment is usually quite high. If an investor cannot afford a minimum investment, they may be better suited for a different hedge fund. Further, investors must look at the overall goal of a hedge fund. Even if the fund is affordable, it may not share the same goals as the investors. Hedge funds’ primary goal is to make money; however, some have a more aggressive growth strategy that involves higher risk while others work to keep investors’ money safe through low-risk investments.

Once an investor finds a hedge fund that meshes with their goals and financial situation, they can start looking more into the fund’s management and performance. When evaluating a fund’s performance, investors should look at its recent returns and past return history. Investors should be cautious of funds with good returns in recent years and a history of sub-par returns. It is possible that a better strategy was adopted in recent years or, alternately, it may also be possible that a fund has just gotten lucky. Assessing the manager is often a simple way of determining a fund’s true path to success. Hedge fund managers should be qualified to handle their investors’ money and have a solid background in investments.

Lack of Access to Capital Hampers Transformative Business Growth

Third Way Capital Markets Initiative pic

Third Way Capital Markets Initiative
Image: thirdway.org

Bill Reeves is an active member of the Hawaii community who focuses on educational programs in the islands and serves on the Kamehameha School’s Investment Advisory Committee. Bill Reeves also has board responsibilities with the East West Center in Honolulu, Hawaii, and with the Third Way Capital Markets Initiative.

With a focus on sensible policies that span partisan political affiliations, the Third Way Capital Markets Initiative conducts in-depth research on everything from economics to health care. A recent article released by Third Way focused on a study that found that new U.S. businesses need improved access to capital to expand.

There are two primary business types, transformational and traditional, with the latter focused on well-defined strategic models in traditional sectors such as hospitality. While a majority fail, transformational companies are those that seek to innovate and disrupt their given sectors, often in ways that also improve people’s lives. Examples of such companies started during the past decade range from Dropbox to Solar City.

Unfortunately, the ranks of these types of businesses have thinned over the past few years. This has to do with a drying up of traditional consumer lending resources that the youngest startups rely on to gain a track record and attract further investment.

Unable to access the desired private capital markets, they must often rely solely on the equity of partners and family members, as well elusive angel investors. For a majority of the startups surveyed, these funds are not enough, and potentially game-changing products, services, and technologies get left in the pipeline.

Characteristics of Hedge Funds

Hedge Funds pic

Hedge Funds
Image: investopedia.com

Cofounder of BlueCrest Capital Management, Ltd., Bill Reeves of Hawaii is an experienced financial leader. Having previously served as a trader for J.P. Morgan and Chase Company, Bill Reeves of Hawaii helped BlueCrest Capital Management become the third-biggest hedge fund firm in Europe with about $35 billion from institutional investors around the world.

In general, hedge funds share a few similarities with mutual funds. Hedge funds cannot engage in insider trading or commit fraud, but they are not regulated by any sort of federal or international organization. Hedge funds are not required to register with the Financial Industry Regulatory Authority or the U.S. Securities and Exchange Commission (SEC), but many funds still choose to register with these entities to give their investors peace of mind. In part, it is this lack of official regulation that allows hedge funds to have higher returns. Hedge fund managers have a much wider array of investment techniques available to them than traditional money managers.

Another trait of hedge funds is that they are illiquid. This essentially means that investing in a hedge fund is a long-term decision. In many cases, investors cannot remove money from the fund for at least two years. While this may be unsettling to some investors, hedge funds are typically managed by individuals who are extremely knowledgeable about the field. Plus, most hedge fund managers get bonuses based on how the fund performs, so they are incentivized to make good investment choices.