Some unique characteristics of a hedge fund

 

As the founder of PartnersAdmin, Scott Tominaga has a good vantage point of what goes on in the world of finance and investments. He generously shares his knowledge through a set of blogs discussing topics in his industry. This one discusses hedge funds and their characteristics.

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1. A hedge fund is a type of fund that is not regulated by the Securities and Exchange Comission (SEC). One of the consequences of this is that hedge funds cannot be marketed or promoted through any form of mass media. This is why you don’t see any newspaper, magazine, or TV commercial that advertises hedge funds or opportunities to invest in them, shares Scott Tominaga. This simply means that the SEC does not have to watch your back when you make these investments.

2. A hedge fund cannot take money from the public. There are many investment models out there that are often described as publicly offered. That is not the case in hedge funds. There are really no firm rules when it comes to hedge funds, but there are discriminators at work, which can profile its potential clientele. Typically, hedge fund investors are accredited investors, meaning that they have a certain net worth or income in order to get into this type of unregulated arrangement, notes Scott Tominaga. 

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3. In contrast with mutual funds, wherein the fund manager is incentivized with a percentage of the asset involved in the investment, thereby motivating him to pursue a bigger investment from the client, hedge funds are more lucrative. A hedge fund, a relatively more actively managed fund, gives the fund manager the opportunity to get larger fees as well as the profits of the investment, even as high as 20% of the returns.

With almost two decades’ experience in the industry Scott Tominaga he has played primary roles in the establishment of several operational infrastructures, successfully interfacing with fund managers and professional service providers to establish efficient and transparent operations and reporting structures. Discover more about his work by visiting this page.