The Prudent Investor's Guide to Hedge Funds : Profiting from Uncertainty and Volatility

257 Pages·2000·0.69 MB·English

by  James P. Owen

The Prudent Investor’s
Guide to Hedge Funds

The Prudent Investor’s
Guide to Hedge Funds
Profiting from Uncertainty and Volatility
James P. Owen
John Wiley & Sons
New York • Chichester • Weinheim • Brisbane • Singapore • Toronto
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Copyright © 2000 by James P. Owen. All rights reserved.
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This book is dedicated to
my wondrously talented, witty, and effervescent
(not to mention beautiful) wife, Stanya,
who is the light of my life.
She also writes all my dedications.

Contents
Acknowledgments ix
Preface xi
Part I Why Conservative Investors Should Know about
Hedge Funds 1
Chapter 1 What’s Wrong with Traditional Money Management? 3
Chapter 2 How Did Investment Management Go Astray? 13
Chapter 3 The Growing Appeal of Alternative Investments 33
Part II What Hedge Funds Have to Offer 47
Chapter 4 What Exactly Isa Hedge Fund, Anyway? 49
Chapter 5 A Look at Hedge Fund Performance 73
Chapter 6 Narrowing the Field: “The Big Four” Strategies 91
Chapter 7 Is There a Hedge Fund Strategy for All Seasons? 109
Part III Making Hedge Fund Investments 129
Chapter 8 Investing in Hedge Funds—How Much? 131
Chapter 9 Tapping into the Wealth of Resources 145
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viii Contents
Chapter 10 Selecting a Hedge Fund That’s Right for You 165
Chapter 11 Getting Comfortable with the Terms of the Deal 187
Chapter 12 Staying on Top of Your Investment 205
Closing Thoughts 221
Index 231
Acknowledgments
It’s been said that there are two kinds of people who should never write a
book: those who know nothing about the topic, and those who know
everything. Luckily, when I began writing this book two years ago, I fell
somewhere in between. Knowing how much I didn’t know, I made sure to
assemble a top-notch team of collaborators to help me pull this project off.
If this book is successful it will be due to our collective efforts. My deepest
thanks go to:
Harvey Shapiro (New York City), an experienced financial writer who
has written for Institutional Investor and the New York Times, who did
much of the initial research, contributed enormously to early drafts,
and gave us the benefit of his vast store of Wall Street knowledge.
Brigitte LeBlanc, LeBlanc & Company (Mill Valley, California),
writer extraordinaire, who helped shape the flow and structure of the
book, sharpened the writing, and was always there to provide wise
and objective counsel. She is a truly gifted collaborator.
Kristine Detwiler, CFA, CPA, The Detwiler Group, Inc. (Cor-
nelius, North Carolina), who did the invaluable and exacting work
of digging up data and writing about the more technical aspects of
hedge fund investing. She also critiqued manuscripts, checked facts,
crunched numbers, and was on top of every detail. This book could
not have been completed without her.
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