Consumers Should Practice Caution as Hedge Funds Gear Up to Advertise

July 17, 2013 Ryan James Hedge Fund News

Now that the Securities and Exchange Commission is giving the green light to hedge funds to advertise, investors should proceed through that light with caution.

It is no accident that the SEC forbade hedge funds from advertising to the general investing public: hedge funds are no place for the faint-hearted, or risk adverse. Yes, it’s true that only accredited investors are permitted access to these particular investment vehicles, but even they might do something they could regret if they are overly tempted by ads which will begin appearing on television, radio, and in print.

So be warned: hedge funds are private investments which use complex tactics, combined with leverage, to try and maximize returns and protect capital. Sounds good, but because they emphasize absolute, positive returns regardless of market conditions the funds use unconventional strategies like long/short, event-driven, global macro, market-neutral, relative-value arbitrage and more with strange-sounding appellations, most of which are unsuitable for Joe Investor. Take extreme care when doing any of the following three activities: Investing in them, investing in ways similar to them, or investing in other, lower-priced products which are hedge fund wannabees.

Yes it’s true that the vast majority of investors are not equipped to enter the hedge fund marketplace, but today it is possible to get a piece of the hedge fund action for as little as $50,000, with more funds like these expected to pop up along with the new ads. To quote an old saying, “Buyer, beware.”

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advertising, Hedge Funds, SEC,

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