Posts Tagged ‘Hedge’

Should we regulate the hedge fund and financial services industries like the Europeans are doing?

Should we regulate the hedge fund and financial services industries like the Europeans are doing? Check out www.thomhartmann.com for more information.

This video covers the importance of retaining public relations services for hedge fund managers.

IndexIQ Announces January 2011 Performance of Its IQ Hedge Family of Investable Benchmark Hedge Fund Replication Indexes

#1 of 3 illustrations: Wind = Clean Green Energy


Image by boston7513 Kevin
You can see and read more in my Sustainable Energy and Hydrogen economy Set
www.flickr.com/photos/kevinmoore001/sets/72157623631942524/

In this Illustration we have my concept for a floating turbine wind farm that would be deployed far out to sea, over the horizon as to not effect the skyline or the fishing industry. Conventional sea based wind farms are expensive to build and the consumers see this reflected in their utility bills. Conventional wind turbine projects cause controversy with the resident that live near them. My wind to hydrogen concept will turn sea water into liquid hydrogen "Electrolysis" that can be used to heat homes, power fuel cells for hybrid vehicles, Electric utility corporations will be using the same infrastructure they use now to store and transport this fuel, and use the same natural gas burning facilities they currently have in place with little or no modifications. Liquid hydrogen gas burning facilities will turn sea water into clean fresh "Desalinated Water" and generate electricity at the same time. Wind and Hydrogen will not run out or change the worlds climate like burning fossil fuels. We can be Clean, Green, and live the kind of lifestyle we are accustom to living today.

The major advantages of this concept over "conventional" wind to electricity projects, is that Hydrogen can be stored and shipped all over the world, not just to the folks that live near the sea. This concept makes 5 products: Hydrogen, Oxygen, Drinking Water, Sea Salt and Electricity, from the same energy cost of conventional wind to electricity turbines. Conventional wind turbines makes electricity that is transmitted over a short distance, and this electricity can not be stored, it has to be used as it is made. Conventional wind farms are expensive, permanent, inshore platforms that many people think are ugly and protest to stop projects. This concept will be relocated or duplicated anywhere wind and water are found. No need to to purchase land rights and "Utility Rate Payers", ( This is all of us ) will not see a change in cost because the electric companies will be buying the fuel just as they do now, but rather than natural gas, it will be Clean Burning Liquid Hydrogen!

FACT: The ocean covers 71% of the Earth’s surface and contains 97 percent of the planet’s water. The highest average wind speeds accessible to wind energy development can only be found only far out to sea.

My concept could be mass-produced on land and assembled in a few hours at sea. At a fraction of the cost of Conventional sea based wind farms that require specialized equipment and personnel to constructed them and this comes at cost. My concept will Eliminate the need for inverters to match the currant to the power grid and it would eliminate the need miles of transmission lines. At the same time it will be creating thousands of "New Jobs" where ever this technology is duplicated. New jobs, not for a select few, but rather jobs in many trades and professions the world over.

The National Renewable Energy Laboratory (NREL), found that a kilogram of hydrogen (roughly equivalent to a gallon of gasoline) could be produced by wind powered electrolysis for between .55 in the near term and .27 in the long term. Using conventional wind turbines.
www.nrel.gov/wind/nwtc.html

The total solar energy absorbed by Earth’s atmosphere, oceans and land masses is approximately 3,850,000 exajoules (EJ) per year. This is more energy in one hour than the Earths population uses in one year.

This is not science fiction, the technology is here today!

"Not just whining about it, I have solutions!
My goal here and in life, is to be part of the solution, not a spectator!".
K.R.Moore 2010.

Timeline of hydrogen technologies
en.wikipedia.org/wiki/Timeline_of_hydrogen_technologies

Please feel free to share this with anyone you may feel that would have an interest
Thank you !
Kevin

The floating platform is based on the same concept as the "FLIP" floating instrument platform, launched in 1962 by Scripps Institution of Oceanography, University of California, San Diego and is a very stable platform in all weather.
en.wikipedia.org/wiki/RP_FLIP

www.ceoe.udel.edu/WindPower/ResourceMap/index-wind.html

IndexIQ Announces January 2011 Performance of Its IQ Hedge Family of Investable Benchmark Hedge Fund Replication Indexes
RYE BROOK, N.Y.–(BUSINESS WIRE)–IndexIQ, a leading developer of index-based alternative investment solutions, today announced the performance of its proprietary family of hedge fund replication and alternative beta indexes. Designed as investable benchmarks that replicate the performance characteristics of sophisticated hedge fund strategies, the IQ Hedge™ benchmark indexes were originally …
Read more on Business Wire

Currensee Introduces World Currency Markets as an Alternative to Stock Market Investing
CEO Presents Trade Leaders Investment Program at The International Traders Expo
Read more on Marketwire

Managed Futures and Hedge Funds

Managed Futures and Hedge Funds

Are you in the market for an alternative investment? If you are one of the prudent investors who is seeking to allocate a portion of assets to strategies not normally employed by the investing public this article is a must read.

There are primarily two forms of alternative investment management, hedge funds and managed futures. Hedge funds are invested in a vast number of products, both exchange listed and Over-the-Counter (OTC) derivatives. Managed futures are generally only invested in exchange listed commodity futures contracts, regulated by the Commodity Futures Trading Commission (CFTC). Be careful! If the wrong investment is chosen the investor may be left with a bad experience of alternative investment products. This article will focus on the very important issues of transparency, liquidity, lock ups, returns and taxes in regards to the alternative asset class. Readers should leave with a better understanding of a few of the primary issues involving any alternative asset investment.

TRANSPARENCY

Transparency is an issue with any investment. Most investors want to know exactly what their money is doing at all times. Giving money to someone who claims to have returns of X without knowing what the manager is actually doing is generally a bad idea. Transparency is becoming more and more of an issue as the universe of investable products grows exponentially. The recent hedge fund “blow-ups” are a case in point.

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Hedge funds are alternative investment vehicles that can be invested in anything from Johnson and Johnson common stock to over the counter derivatives based in Zimbabwe. The universe of products is virtually limitless. When an investor becomes a limited partner of a hedge fund, in most cases he/she is giving it free reign over the funds they have invested. If the manager chooses to, he/she could invest in waffles and chances are the investor would never have any idea. Hedge funds are not required to tell investors exactly where capital is being deployed. To make matters worse, many of the products do not have a closing value at the end of the day, so even if the investors knew what the funds were invested in they would have no idea what their investment was actually worth on any given day. There is absolutely no transparency. All the investors get is a quarterly statement informing them of gains or losses and maybe some commentary if the manager is not too busy. In some cases investors hear that, virtually overnight, more than 50% of their funds have been lost. Long-Term Capital Management is the most infamous case of a hedge fund “blowing up,” but recently there have been quite a few more that are going down in history, such as Amaranth’s $6 billion loss in 2006, Absolute Capital Groups’ 30-40% loss and Focus Capital’s 80% loss in early 2008.

The story is much clearer if the investor is involved in a managed futures product, or with a Commodity Trading Advisor (CTA). A CTA generally has a very specific strategy that is defined in the investor’s disclosure document, which is similar to a prospectus. The CTA is required to state exactly what products the investor’s money will be invested in as well as exactly how the manager plans to invest. What’s more, once invested with a CTA investors will receive a statement every time a trade is placed. At the end of every day the products in which investor capital is deployed are marked with a closing price determined by the exchange. This allows the investor to know exactly what his/her investment is worth.

It is really up to the investor as to what makes him or her comfortable. If one person does fine not know where his assets are invested then the transparency issue may not need to be considered, but for most of us it is of the utmost importance.

LIQUIDITY

Liquidity: a business, economics or investment term that refers to an assets ability to be easily converted to cash through an act of buying or selling without causing a significant movement in the price and with minimum loss of value. (defined by wikipedia.org)

Liquidity can be an issue with both hedge funds and managed futures, but a good manager will tend to avoid instruments that are illiquid or difficult to trade in and out of.

As stated previously, hedge fund managers can and do invest in a vast array of products. Many of these products are OTC derivatives or products that are traded between banks and the hedge funds directly. If the hedge fund buys an OTC derivative from a bank, and later decides it needs to sell that particular product back, the bank alone determines what they will buy it back for, or worse, if they can buy it back at all. In that case the hedge fund may not be able to get out of a losing position.

Liquidity is an issue that has gripped a number of hedge funds lately. Many have been forced to shut down because they were invested in highly illiquid derivatives linked to sub-prime mortgages. When the counter parties began to refuse to buy the products back the funds had no choice but to liquidate their portfolios at extremely discounted prices and shut their doors, or refuse investors’ requests to withdraw their money.

Unfortunately liquidity can be an issue for managed futures as well. Most managers only trade in highly liquid commodities; however, there are times when even the most liquid commodity can become illiquid very fast. Illiquidity can be caused by many factors, from politics to supply and demand imbalances to general investor fear and greed. A prudent manager will prevent investors from being too exposed to liquidity risks by implementing some sort of hedge, diversification or proper position sizing of the account.

When dealing in listed markets, as most managed futures products do, the counter party to any trade usually has a number of other counter parties willing to buy or sell at specified prices. This kind of open auction system generally allows for prices to be fair. To give investors even more comfort each account is guaranteed by the exchange clearing house through customer margin deposits, meaning that the chance of a counter party defaulting on any given transaction is drastically reduced. However, when dealing with obscure OTC markets, as many hedge funds do, most of the time there is only one counter party to the trade, meaning it is not guaranteed by anyone, which not only makes the chance of default higher but at the same time makes the likelihood of getting a fair price on any given trade much less.

When investing in a hedge fund or managed futures product it is important to understand how liquidity can affect the investment. If a manager is using too much leverage or is consistently involved in thinly traded OTC products that are less liquid it may be a sign that investing in that vehicle at that time is not wise.

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LOCK UP PERIOD

A lock up period is the time after the initial investment in which the investor is not allowed to withdraw funds from that particular vehicle. After the specified lock up period investors are free to withdraw funds as defined in the disclosure document of each hedge fund.

Almost all hedge funds have a lock up period. This period can range from as little as three months to longer than two years. Generally the more established the fund the longer the lock up period. A lock up period is generally good for managers and not so good for investors. If a manager has a lock up period of one year and immediately after making an investment the trading starts to go poorly, that manager has a right to continue trading that money until the lock up period is over; because the investor has previously agreed to the terms and conditions in the disclosure document he or she is not able to request redemption until the specified time period is up.

Managed futures products are different. Most managed futures products do not have lock up periods. There are a few that have lock ups ranging anywhere from three months to a year, but this is not the status quo in the industry. If an investment in a managed futures product needs to be redeemed it can generally be taken care of within a few hours. This is very beneficial if you have taxes due, college tuition that needs to be paid or any unexpected expenses that comes up.

Lock up periods will be foreign to most investors who have not invested in alternative investments before. Make sure when reading the disclosure document that the lock up and withdrawal periods are properly discussed. Also, note that in many cases the lock up period is an area that can be negotiated to the investor’s benefit.

RETURNS

Returns are returns, right? Wrong! Returns are a very deceiving form of analysis for any alternative investment. Most investors make investment decisions based on previous returns, but this is a flawed concept. The main issue is that past returns have absolutely nothing to do with future returns. This has been proven time and time again as managers that were once out-performing begin to under-perform and managers that were struggling rise to the top. Wise investors will not base their investment decisions on past returns or assumptions made about future returns.

The fact of the matter is that no manager really knows what returns will be from year to year. Managers can target a certain return but there is absolutely no guarantee that the goal will be achieved. If any manager, whether hedge fund or CTA, specifically promises a return that is a sign to seek a different manager. Likewise, if a manager touts his/her past returns it is a sign he/she does not fully understand that returns are completely unrelated to each other and have no bearing on the future.

There are numerous databases in which managers can post monthly returns and potential investors view them, but this is completely the wrong way to make any investment decision. Chasing returns leads investors down the wrong path and can have devastating effects on their capital (see “Transparency”).

What investors need to do is search through these alternative investment managers by strategy, not by returns. The investor should pick a few advisors from each category after reading about the managers’ approach to the market. Once a few are decided on, the investor should call each manager and request more information and/or a meeting. All managers will have a disclosure document and possibly some marketing material that can be given to potential investors. Meeting the manager of a hedge fund can be a difficult task unless the investor is placing a very large sum. CTAs, however, are generally much more open and willing to meet with investors, so getting a meeting with them is entirely possible.

Once the proper due diligence is done and the investor likes the manager’s strategy and approach, an investment can be made. Be careful not to invest too many assets with any one manager or specific style, as that is not proper diversification. It is wise for the investor to build a portfolio of alternative asset managers over a wide range of strategies, as this may reduce the risk of any one particular manager or style.

TAXES

Hedge funds often provide the investor with very unfavorable tax treatment because they are invested in many different products all over the world. This may have a vast array of consequences on the investor’s overall taxes. Hedge funds uniformly report investors’ gains or losses in August after each tax year, forcing an extension of filing. Additionally, the tax returns are very complex, often over 30 pages for each fund invested in. To try and explain all the possible tax consequences of a hedge fund would probably require an entire book. In the interest of time the entire spectrum of hedge fund tax accounting simply cannot be delved into at this point.

For managed futures products the tax accounting is very simple. Since most trades take place within Regulated Futures Contracts (RFC) regulated by the CFTC, contracts receive Internal Revenue Code Section 1256 treatment. In this case 60% of profits are taxed at the long-term capital gains rate and 40% are taxed at the short-term capital gains rate. For a profitable managed futures product this effective tax rate of 23% provides a 12% advantage over hedge funds that trade frequently. This can, however, be a stumbling block in the case of large losses. When a loss is recorded and 60/40 treatment has been elected the investor is only allowed to carry forward $3000 of those losses every year. If the investor’s loss is large this can be a real headache, as he/she will be carrying forward losses indefinitely. There is a bright side, and that is if the investor has created a portfolio of managed futures products and another manager has produced gains the investor can write off the loss against the gains of that other manager.

In the end calculating taxes for a managed futures product is much simpler than for a hedge fund. For some investors this may not be an issue, as their CPAs will manage everything, but it would be important to consult with the CPA prior to investing to make sure he/she fully understands the implications involved with the new investment.

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What is a hedge fund? Is it a safe way to invest?

I am starting a hedge fund for financing independent movie producers, how do I find investors ?

I am looking for lots of individuals willing to be small investors but want to enjoy the returns that can only be gained by the big hedge fund members. I want to issue shares in the management company to interested investors and in turn they’ll have a share in the company before the company grows large. If you are intersted in providing me with creative ideas and financing options, respond to this inquiry

what’s the difference between hedge funds and mutual funds?

Closed-End Funds, Exchange-Traded Funds, and Hedge Funds: Origins, Functions, and Literature

Product Description
“Closed-End Funds, Exchange-Traded Funds, and Hedge Funds: Origins, Functions, and Literature is a concise and valuable book that will be of interest to individual investors, financial professionals, and academic researchers, alike. It provides a brief history and institutional discussion of these investment companies and also presents a summary of the research on these funds. Investment practitioners will find the book useful as a reference and as a quick refresher… More >>

Closed-End Funds, Exchange-Traded Funds, and Hedge Funds: Origins, Functions, and Literature

hedge funds question?

—I understand ETF means Index funds.They bet mostly based of trading index exchanges.
—I understand mutual fund meand they invest in different kinds of securiteis like stock funds, bond funds, mixed funds etc……..
—I do not understand hedge funds…..What is the primary difference between mutual funds & hedge funds?Hedge fund managers invest in what?What they do differently?Hedging means protecting..ok….what kind of things they do to hedge?
Please give me some basic understanding for this funds clearly and simple way.
aprreciate your help and thank you

Stocks Investment Tips : How to Give Money to a Hedge Fund

Before giving money to a hedge fund, it’s important to get a list of hedge funds from a large brokerage firm. Learn about getting hedge fund approval from a potential shareholder with help from a portfolio manager in this free video on investments and the stock market. Expert: Roger Groh Bio: Roger Groh is the founder of Groh Asset Management. Filmmaker: Bing Hu

How to find buyer for catchy domain name, tag line, name for mutual or hedge fund, advertising stocks brokrg?

I have a catchy domain name, tag line, and company name for a mutual or hedge fund, or advertising services for promoting the brokerage of stocks. What are best ways to find people who would be interested in it?