A Good Year For Hedge Funds After Lagging Badly For A Decade Investing in a hedge fund may well spark an interesting conversation at a cocktail party, but a closer look at these high-end opportunities tells quite a story. First, you have to be an accredited investor to join in. For the typical hedge fund, that means a net worth of at least $1 million, exclusive of your primary residence, as well as an annual income over $200,000 if you’re single, or $300,000 if you’re married. Then there’s the matter of fees. The typical fee for a hedge fund investment is 2% of assets managed plus 20% of the profits each year. That’s a high price to pay, but one would hope that the ostensibly super-bright people running these operations could generate returns that justify the cost. The reality is that they have not. Indeed, average hedge fund returns over the latest 10 years have been less than half those of the Standard & Poor’s 500 Index. For that matter, they have lagged beh
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.