The advantages of fund of hedge funds

Fund of funds, also known as a multi-manager investment, is an alternative investment strategy wherein a fund is put in another type of funds. Instead of investing directly in investment vehicles, funds are invested in a portfolio or partnerships that already contain underlying assets. One scheme of this investment strategy is fund of hedge funds.

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Hedge fund investment, which Scott Tominaga has years of experience managing, has proven to be profitable for so many investors. Investing in fund of hedge funds also offers some benefits, such as the following:

Diversification: Every adept investment manager would concur that for a portfolio to be able to yield maximum possible returns and minimize exposure to risks and a single fund manager, it has to be as strategically diverse as possible. By putting in money in fund of hedge funds, an investor can get a piece of returns from all of the underlying assets and funds and gain exposure to an alternative asset type that does not compromise the overall portfolio structure.

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Outsourcing of manager talent: Not everyone is equipped with the know-how and expertise requisite to investing. This is a reason PartnersAdmin LLC, of which Scott Tominaga is the Chief Operating Officer, offers a plethora of financial services to its clients. By investing in fund of hedge funds, it entails outsourcing the decision-making to the manager, who typically has the resources, experience, methods, network, and effective due diligence in handling this investment strategy.

Learn more about investment in hedge funds by following this Scott Tominaga Twitter page.

What does a hedge fund manager do?

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In general terms, a fund manager is a financial expert responsible for handling the funds they supervise, in such a way that such supervision is in keeping with set goals and maximized returns for the benefit of investors, says financial expert Scott Tominaga of Partners Admin LLC. Those who are seasoned players in the industry and experienced at different levels of the fund management ladder will often secure senior positions in companies.


Hedge fund managers are in charge of both long-term and day-to-day operations of funds. The overall work entails doing a variety of tasks, from balancing portfolios and marketing funds to prospective investors to creating ethical business standards and implementing office policies and procedures.

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Of course, a crucial part of the challenge of the job is to seek out investors. As soon as investors come in, the hedge fund manager must ensure that any investment decision is made with the fund pool in mind. They spend their workday researching and studying the financial market and making investment plans, looking for various other investment opportunities, analyzing trends both in the media and the stock market, and networking with other businesses.

Most hedge fund managers begin as analysts then get promoted to senior analysts before becoming a full-fledged portfolio manager. Once they have fully secured their place in a company, continuous engagement is key, from creating their own team of buy-side analysts and managers to taking charge of generating senior-level investment ideas, explains Scott Tominaga.

PartnersAdmin LLC’s Chief Operating Officer Scott Tominaga 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. Visit this blog for related posts.

What are the key roles of an investment manager?

When people want to invest some of their savings on funds, bonds, stocks, or other forms of investment, they often seek the help of an investment manager. Investment managers invest on persons, organizations, and other form of investment in behalf of their clients. According to finance expert Scott Tominaga, their regular tasks include day-to-day portfolio monitoring, buying and selling securities, measuring the performance of their portfolio, and reporting results to their clients. Besides these, here are a few key roles of investment managers.

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Educating clients
It’s not enough for investment managers to tell their clients whether or not a specific company or an investment is a good one. Investment managers should also educate their clients on the types of businesses in their portfolio. And, more specifically, it’s important for them to teach clients where their money is going and the merits of choosing a company or an investment over another.

Risk management
One of the reasons why people look for investment managers to help in investing in the market is because people do not know the risks involved in investment or stocks trading. Investment managers actively assess the risks involved in investing in certain bonds or companies before they commit their client’s money.

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Holding companies accountable for their performance
Given that investment managers put their client’s funds into companies, they also have the right to hold the company accountable for any major event that can affect their investment, explains Scott Tominaga. By doing so, companies receive pressure toward sustaining success and generating growth.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC, whose offices are based in Los Angeles and San Diego, California. PartnersAdmin LLC was established in July 2008 with the intent of providing a quality, outsourced solution to meet the dynamic back office needs of the alternative fund industry in response to the industry’s increasing focus on reducing systemic risk and promoting investor protection. To know more about Mr. Tominaga, visit this site.

Be safe and smart: Identifying investment fraud

Illegally defrauding investors is one of the biggest acts of embezzlement one can enact in the country. Bernie Madoff made off with as much as $50 billion from his clients in one of the biggest acts of fraud in history through a Ponzi scheme. And sadly, where there is money, there are people who are willing to dupe and deceive their way into making a fortune.

This is why people can be so paranoid about investment. Handing your hard-earned money to a financial guru whose job is to make your money grow may seem outlandish, but not everyone has an acumen for business. To avoid investment fraud, here are two helpful tips you can follow.

When the returns are too good to be true, walk away

Ponzi schemes, as well as other fake financial opportunities, could easily lure people into investing their money by simply flaunting a return proposition that they cannot refuse. Madoff promised returns of approximately 1% each month. That might seem small, but in reality, it was already too good to be true. It was small enough to elude the SEC but big enough to fool even legitimate businessmen.

Do due diligence before investing

Doing background checks isn’t so hard given today’s technology, and the information found online. There are regulatory institutions like the FINRA (Financial Industry Regulatory Authority) that helps people do background checks on brokers and is available online. Not only should you do a sweep on your broker, but you should also check the company as a whole.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC, whose offices are based in Los Angeles and San Diego, California. PartnersAdmin LLC was established in July 2008 with the intent to provide a quality, outsourced solution to meet the dynamic back office needs of the alternative fund industry in response to the industry’s increasing focus on best practices to reduce systemic risk and promote investor protection. For more reads on investment, visit this blog.

Five essential differences between private equity and venture capital.

Private equity and venture capital are often confused because of the way both of them refer to firms that invest in companies and exit through selling investments in equity financing, including initial public offerings (IPOs). But the specifics paint a whole world of difference between the two—here are five to remember:

The companies they buy

Private equity firms largely buy mature, established companies. These might not be generating enough profits or are regressing, and they are bought in order to increase their revenues. On the other hand, venture capital firms put their money into startups that demonstrate high growth potential. While PE firms buy companies across all industries, VC firms are focused on technology, biotech, and clean tech investments.

Percentage acquired

PE firms nearly always buy 100 percent of a company, while VC firms acquire only a minority stake or less than 50 percent. While the former seeks to have total control of the firm after a buyout, the latter usually prefers to spread out risk and invest in different entities.

Amount of investment

PE firms invest at least $100 million in a single company. Venture capitalists, on the other hand, spend $10 million or less in each company, since they largely deal with startups with less predictable chances of success.

Focus

PE firms don’t maintain ownership for the long term, instead preparing for a level of exit strategy after a few years. They seek to improved upon an acquired business and sell it for a profit afterwards. Venture capitalists get involved in businesses’ earliest stages of operation, and it’s often the startup capital they provide that offers new businesses the means to become appealing to private equity buyers.

People

PE firms tend to attract former investment bankers, while VC firms obtain a more diverse mix such as product managers, bankers, consultants, and former entrepreneurs.

Scott Tominaga is PartnersAdmin LLC's Chief Operating Officer with over 17 years in the financial services industry. Read more about the finance industry on this page.

The basics of venture capitalism.

Keep in mind that two types of financing exist: equity and debt. The former refers to the investment a company gains in exchange for the investor having part-ownership of the business. Debt financing essentially means payment with interest.

Venture capital or VC comes in at the onset, referring to financial capital given to high-potential startup companies in exchange for equity. Venture capitalists provide the funds, while their firms oversee the sourcing of deals, making investment decisions, and maintaining the resulting portfolio.

There are different sources of capital to choose from, including so-called angels, micro seed funds, and growth equity. But venture capital is unique in that it works by utilizing medium funds that invest large amounts of capital to gain equally large amounts of equity.

The process of gaining venture capital begins with an entrepreneur getting introduced to various VC firms. The entrepreneur then pitches their business to the said firms, provides them with term sheets should they decide to invest, then cultivate the business relationship through time. The final step is the repayment of the venture capitalist(s) through IPO, acquisition, and even bankruptcy, should the business fail.
Venture capital often plays a major role in the stage of a company’s lifecycle wherein the business is beginning to commercialize its innovation, especially as it now builds the needed infrastructure (manufacturing, sales, marketing) to grow the business.

PartnersAdmin LLC’s Chief Operating Officer Scott Tominaga has worked in the hedge fund and financial services industry for over 17 years. His company was established in 2008 with the intent of providing quality, outsourced solutions that meet the dynamic back office needs of the alternative fund industry. For similar posts, check out this blog.

Understanding the fee structure of hedge funds

When investing in a hedge fund, investors place their money and their trust in the hands of fund managers, which can come in the form of a general or limited partnership or a limited liability company. They are compensated for their service with a fee structure that commonly consists of the following:

Management fee
Whether a hedge fund endeavor pans out and performs well or not, the fund managers are paid with a management fee with a value that falls between 1 and 2 percent of the amount of the assets that are managed. There are even cases that this rate goes higher, especially if the fund manager has a proven track record.

Performance fee
Also called incentive fee, hedge fund managers are paid a percentage of the total profits that their endeavors gain. This serves as a reward for excellent performance. Most fund managers collect 2 percent of the net asset value and 20 percent of the profits as part of the “2 and 20” fee structure. However, like management fee, fund managers can collect a higher performance fee rate.

Many fund managers implement the high-water mark clause, which prevents managers that suffered from hedge fund losses in the previous years from charging a performance fee on new profits to offset the said negative gains.

Scott Tominaga is a renowned expert in the hedge fund industry. He has more than 17 years of experience in the field, as well as in financial services. For more articles like this, click here.