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Strategies & Market Trends : Hedge Funds

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To: Marty Rubin who wrote (58)12/7/1998 3:12:00 PM
From: Marty Rubin   of 120
 
Choices for Fund Investors (BW 12/14/1998)

HEDGE OR MUTUAL?
Hedge funds offer a wider range of investment choices than mutual funds do. They charge more, too: typically 1% of assets annually and 20% of profits. Some mutual funds have begun mimicking certain hedge-fund strategies by employing short-selling. These funds charge 2% to 2.5% of assets, and none of the profits.

MACRO OR NICHE?
The best-known hedge funds are global ''macro'' funds that make leveraged bets on currencies and interest rates. More common are funds that focus on one area, such as distressed securities or bond arbitrage.

SINGLE OR FUND OF FUNDS?
If you select your own fund, you can zero in on those you like best. If you go with a fund that invests in several hedge funds, you get diversification, which can reduce your risk. But you have to pay an extra layer of fees.

INDEPENDENTS OR INSTITUTIONS?
Brokers and mutual-fund groups are starting up more hedge funds.
Institutions usually have better investor relations than hedge-fund boutiques, but that doesn't mean they earn better returns.

Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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