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.