To make it easier for you to prepare meeting materials, we’ve developed these slides on how to educate clients about the myths of hedge funds. The presentation is in a Word file to make it simpler to customize content to meet your clients’ information needs.

Enjoy, and we hope this offering helps enhance your client meetings.

SLIDE 1

Perceptions of hedge funds are often coloured by myths.

Here are four of the most common.

SLIDE 2

Myth 1: Hedge funds are risky and highly leveraged

SLIDE 3

Hedging is actually a strategy used to guard against the risk of loss.

The perception of hedge funds as riskier than traditional investment vehicles is incorrect.

SLIDE 4

In fact, the traditional, long-only approach to investing is unable to handle the risk of market downturns.

Hedge funds, on the other hand, use a wide range of tools to execute advanced investing and trading strategies (such as the ability to go long or short).

SLIDE 5

Use of leverage, which is typically controlled and monitored by a hedge fund’s prime broker, is minimized to protect the broader portfolio.

SLIDE 6

Myth 2: Hedge funds have high fees

SLIDE 7

The underlying philosophy of the hedge fund industry is that the skill of the manager should drive the performance of the fund.

SLIDE 8

Traditional investment funds (e.g., mutual funds) typically charge a flat fee for active management regardless of performance.

SLIDE 9

Hedge fund managers often derive a substantial portion of their fees when the investor sees a positive return.

As industry best practice, hedge fund managers generally show their products’ historical performance net of fees and expenses.