Hedge Funds For Dummies

Hedge your stock market bets with funds that can deliver returns in down markets

Hedge Funds For Dummies is your introduction to the popular investing strategy that can help you gain positive returns, no matter what direction the market takes. Hedge funds use pooled funds to focus on high-risk, high-return investments, often with a focus on shorting—so you can earn profit even when stocks fall. But there’s a whole lot more to it than that. This book teaches you about the diversity of hedge funds, their pros and cons, and their potentially lucrative role as a part of your portfolio. We also give you tips on finding a broker that is right for you and the investment you wish to make. Let Dummies be your investment advisor as you set up a strategy that will deliver results.

• Understand the ins and outs of hedge funds and how they fit in your portfolio
• Choose the funds that make the most sense for your unique situation
• Build a hedge fund strategy based on tested techniques and the latest market data
• Avoid common mistakes and identify solid funds to ensure success

This Dummies guide is for traders and investors looking to learn more about hedge funds and how they can become lucrative investments in a down market.

Ann C. Logue, MBA, worked for twelve years as an investment analyst and earned the Chartered Financial Analyst designation along the way. She also taught business administration at the University of Illinois. Now, she’s a finance writer with dozens of publications under her belt, including Day Trading For Dummies.

Introduction 1

Part 1: What Is a Hedge Fund, Anyway? 7

Chapter 1: Hedge Funds: Alternative Assets and Alternative Strategies 9

Chapter 2: Not Just a Sleeping Aid: Analyzing SEC Registration 25

Chapter 3: How to Buy into a Hedge Fund 39

Chapter 4: Using Hedge-Fund Strategies without the Hedge Funds 51

Chapter 5: Hedging through Research and Asset Selection 71

Part 2: Looking at Alternative Strategies 93

Chapter 6: Calculating Investment Risk and Return 95

Chapter 7: Buying Low, Selling High: Using Arbitrage in Hedge Funds 123

Chapter 8: Short-Selling, Leveraging, and Other Equity Strategies 139

Chapter 9: Observing How Hedge Funds Profit from the Corporate Life Cycle 159

Chapter 10: Macro Funds: Looking for Global Trends 173

Part 3: Determining Whether Alternative Investments Are Right for You 189

Chapter 11: Fitting Alternatives into a Portfolio 191

Chapter 12: Examining How Hedge Funds Are Structured 205

Chapter 13: But Will You Make Money? Evaluating Hedge Fund Performance 223

Chapter 14: You Want Your Money When? Balancing Time and Liquidity 245

Chapter 15: Taxes, Responsibilities, Transparency, and Other Investment Considerations 257

Part 4: Special Considerations Regarding Hedge Funds 273

Chapter 16: Hooking onto Other Types of Hedge Funds 275

Chapter 17: Hiring a Consultant to Help You with Hedge Funds 289

Chapter 18: Doing Due Diligence on a Hedge Fund 301

Part 5: The Part of Tens 317

Chapter 19: Ten (Plus One) Big Myths about Hedge Funds 319

Chapter 20: Ten Good Reasons to Invest in a Hedge Fund 325

Index 333

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