Anonymous
Saw someone ask this before but without any direct answers. Assuming I have already 100-200k cash (but not accredited investor), how can I gain access to one without going through an ILP, with performance slightly better than indexes?
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Kelly Trinh
23 Nov 2019
Backoffice technical at financial services firm
I'll leave the access question to others; but on the performance piece, hedge fund as a asset class have been underperforming in the last 10 years to more passive investments (famously Buffett made a bet that hedge funds cannot beat the S&P500 and he won handily). Between the strategies being challenged by the relentless march of progress and rise of data, they have a hard time justifying the traditional 2 and 20 fee structure (2% annual management fee, 20% of index outperformance)
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It's important to remember that hedge funds are not an asset class but a catch-all term for different strategies (Equity long-shorts, long only, fixed income, managed futures, merger arb etc.) Is there a specific hedge fund you're looking to invest in? Presumably there is a specific exposure you're looking for which is non-correlated to your existing holdings (hence the "hedge"). In that case, it's best to check if the hedge fund is open to non-accredited investors.
My understanding is that this is rare since these are considered sophisticated financial constructs and not readily available to retail investors but you should be able to find out once you identify a hedge fund you'd like to get exposure to.
That said, be wary of fees as these services do not come cheap