Signs hedge fund and its differences from traditional funds:

• hedge fund focuses on absolute income, not relative (mutual funds try to beat the market, and hedge funds try to make money in any market conditions)
• hedge funds They use the widest possible range of tools, the main difference is that they can make money by lowering shares.
• hedge funds actively use leverage
• payment for management services according to scheme 2-20 (2% of assets and 20% of profit per year)
• the regulator does not interfere in any way with the manager’s strategy
• not registered in Russia
• large volume of attracted investor funds
• “entrance ticket” is at least $100 thousand.

Difference hedge fund from a mutual fund and its main advantage is the lack of regulation by the laws and regulations of the Federal Financial Markets Service, which gives the hedge fund manager much greater freedom of action than the manager of a mutual fund, who must strictly follow the investment declaration of the mutual fund.

In 1998, Webster's Dictionary described hedge funds as using "speculative techniques involving significant risk."

The result of a mutual fund, in the vast majority of cases, depends directly on the dynamics of the market itself.

Flaw hedge fund in comparison with mutual funds - less transparency and legal protection for the investor.

Every successful manager strives to create his own hedge fund to increase the volume of operations. However, for every rags to riches hedge story, there are at least two or three rags to rags, or rags to riches, and then back to rags stories.

The average lifespan of a hedge fund, like the career of a National Football League player, is less than 4 years. Every year, approximately 1,000 hedge funds close due to poor performance and failure to cope with the crisis.

During the crisis of 2007-2009, about 500 hedge funds went bankrupt, victims of a rapid flight of investors. Lenders curtailed credit lines for absolutely all funds because they did not know how heavily the funds were loaded with toxic assets.

Hedge funds can be very vulnerable if they leverage short-term repo financing to purchase long-term illiquid instruments (like CDOs)

• $1500 per month, cheapest fund option (BVI or Cayman)
• auditor $12,000 per year
• middle office (not obligatory) $1500-2000/month

Purpose of Hedge Funds
The history of the hedge fund, audited for 3 years, allows you to attract long-term institutional money. Moreover, in order to attract big money, it is necessary to show a relatively low profitability of 10-30% and minimal risks.

1. Relative value strategies(relative value strategies) - the main idea is to combine long and short positions on any instrument. As a rule, the strategy is applied on instruments between which there is a connection: * 2 shares of one sector * 2 bonds of 1 issuer with different durations * ordinary and preferred shares of 1 company The manager looks for situations of excessive deviation of the price of 1 asset from another and sells the overvalued one, buying the undervalued one .

2. Event-Driven(event-based strategies) - strategies with a corporate focus, based on the anticipation of important events (mergers/acquisitions, share buybacks, restructuring, bankruptcy rescue). The main risk of the strategy is that the event that the fund manager is counting on does not take place.

3. Directional/Oppurtunistic(directional strategies) - buying undervalued assets and selling overvalued ones, an attempt to predict the market in which a strong movement will occur. As a rule, such funds have the most aggressive risk profile (risk/return). The strategy does not involve hedging, but is focused on choosing the right bet. The “Global Macro” and “trend following” strategies also belong to this class of strategies (a more special case).

• Fixed Income Arbitrage
• Quantitative strategies
• Equity Long-Short-
• Volatility trading
• Global Macro- global macroinvesting is a strategy of hedge funds, the essence of which is the analysis of global macroeconomic processes.

Organizational structure of a hedge fund :


Sponsor hedge fund is often its creator. He is the founder, the only holder of voting shares, but voting shares do not give the right to distribute the profits received from the investment. activities of the fund. Sponson may be one of the investors, and receive income on invested capital (non-voting shares).

Investment manager- this is an individual or management company that manages the fund’s money and accepts investments. decisions, management of the operating activities of the fund.

Investment consultant may assist in the operational activities of the fund.

Board of Directors The hedge fund controls all aspects of its activities.

• Monitors the activities of the investment manager and other firms that provide services to the fund.
• Resolving conflicts between shareholders and investment managers.
• Approval of remuneration for the investment manager
• Appoints auditors and selects agents servicing the fund.

Primary Broker
A prime broker is a “pass to the world of great financial opportunities”, which is usually provided by a large broker from among Goldman Sachs, Merril Lynch, JPMorgan, etc.
There is an opinion that “with a NAV of less than 20-30 million they won’t take it to prime, they’ll say they didn’t show up :)”
Goldman Sachs does not work with amounts less than $50 million
A good prime costs $10,000 per month

You can access Goldman Sachs through IB = http://daptrading.com/

Also, this scheme is described in detail in.

Hedge fund returns
consists of 2 components:

• Asset management fee. As a rule, it is 1-2% of the amount of invested funds per year.
• Reward for results (success fee/performance fee) - 20-25% of the profit received.
• industry standard is 2-20, i.e. 2% for management and 20% of income.

Registration of an offshore hedge fund.
In Russia there are no legal mechanisms for creating a hedge fund. Usually hedge fund created offshore (for example, the Cayman Islands). Basic moments:

• soft regulation in offshore zones
• obtaining government permission for registration
• The fund's investment activities are not regulated (do what you want)

Organizational and legal forms of a hedge fund:

• LP - Limited Partnership. General partner + limited partners. Responsibility is established by the constituent agreement. The general partner, as the principal, takes over the management of the fund + day-to-day operations. The general partner has unlimited liability for the debts of the LP. Limited partners are simply passive investors and have no liability beyond invested capital and do not participate in the management of the LP. Taxes are levied not on the partnership but on the partners, at individual rates.
• LLC - Limited Liability Company(Limited Liability Company) - a more advanced, more popular scheme than LP. Participants are no longer called partners, but members; they can exercise leadership themselves or delegate to management. Different classes of shares may be issued for founders, anchor investors and other investors. As a rule, the founders vote. Core investors may enjoy privileges (such as reduced management fees). Any class of investors - individuals and legal entities - can join an LLC. The status of an exempted company allows you to eliminate the need to provide a register of shareholders for public inspection and hold shareholder meetings, simplifying the creation of a fund.
• Unit Trust (unit trust). Trust investors transfer their property in trust to the trust manager, receiving the status of beneficiaries.

• The type of OPF may depend on the legislation of a particular offshore.

Types of Hedge Funds:

• open (open ended) - the investor can withdraw his deposit at any time.
• closed (close-ended) - the investor receives dividends; repurchase of the share is possible only by agreement with the fund.

Geography of hedge funds and types of companies for investment funds:

• British Virgin Islands (BVO)- international business companies (IBC - International Business Company), mutual funds
• Cayman Islands - exempt company, + Segregated Portfolio Company. (“Cayman is the easiest and most common way to open a hedge fund” /quote/). mutual funds
• Bermuda - see Cayman, + segregated accounts company
• Mauritius - global business company, + protected cell company. Tax 3%.
• Guernsey and Jersey (Channel Islands)
• Luxembourg
• Ireland
• Andorra has the most flexible conditions for creating funds.
• In the US, hedge funds are based in Greenwich, Connecticut. American hedge funds can only serve professional investors (qualified investors) with a contribution of at least $5 million for private investors.

Mauritius requires the employment of local staff (directors, secretaries, administrators, etc.) in exchange for tax benefits. Bermuda too, but less harsh than Mauritius.

Russian hedge funds and their results (June 2014):

Geography of hedge funds placement in the USA:

Sources:
Registration of an offshore investment fund (part 1)
What's happened hedge fund and how it works from the inside
Example of hedge fund strategies and typical risks
Hedge fund(wikipedia)
Hedge Fund (wikipedia)
Roger Lowenstein "When Genius Fails"
Barton Biggs "A Hedger Out of the Fog"
Nouriel Roubini, Stephen Mime: “Nouriel Roubini: How I Predicted the Crisis”
About hedge funds (11/21/2011)
Why do we love hedge funds? (01.10.2011)
Hedge funds: Playing the market according to new rules Authors: Kotikov V., Neil J.

4 (80%) 2 vote[s]

The term "hedge funds" is often heard in the world of economics and finance. Let's look at how this type of fund differs from classic investment funds

1. What is a Hedge Fund in simple words

Hedge fund(from the English "hedge fund" - insurance fund) is an investment fund that is available only to professional investors and has greater profitability potential.

Unlike mutual funds, hedge funds have many more options for making money. They are virtually unregulated by anyone in terms of their investments. For example, they can purchase:

• Currency
• Goods

Funds can also take leverage and trade on a bearish basis, which is unacceptable in mutual funds. Thanks to this, they have much more opportunities for action and are potentially more profitable, but on the other hand, more risky. After all, trade can be conducted on all fronts, both up and down.

For using the services of a hedge fund there is a fixed commission of about 2-3% per annum (regardless of the result). Plus, for income above a certain threshold (for example, 10%), a commission of around 20% will be taken. This is similar to mutual funds, but with slight differences.

Investments in hedge funds are long-term in nature. You can sell your share only within the fund to another participant.

2. History of hedge funds

The hedge fund first appeared in 1949 in the United States. It was called A. W. Jones & Co. It was managed by Alfred Jones. His goal was simply to earn a living by making money on the stock market. He took 20% of all profits received.

Alfred Jones's first investors were his friends and relatives. The fund brought an average of 65% per annum over 10 years of operation, which could not but please investors.

After this incident, hedge funds began to spread sharply in the United States. At the time of 1968 there were already 140 of them.

At that time, regulators made strict restrictions on the minimum threshold of deposited funds. As a result, the average person simply did not have enough money to take part. For example, in the USA the cost of entry was from 500 thousand dollars. And this is at that moment! At the current moment, taking into account inflation, this amount would already be equal to 1 million dollars.

Russia also has a similar restriction. You must be a professional investor. And this will require an amount of over 6 million rubles.

Since the regulation of such funds is quite specific (for example, the minimum investment amount), many hedge funds are opened offshore, where the jurisdiction is much softer and allows them to accept investments from small investors.

In total, there are about 12 thousand hedge funds in the world as of 2018 with a total amount under management of 2 trillion. dollars. Moreover, more than half of them are located in two countries: the USA (31%) and the UK (27%). Actually, all movement and development began with them.

In Russia, the first fund appeared only in 2008. But a little earlier, in 2007, the Otkritie corporation opened the first fund in Andorra.

3. Classification and structure of hedge funds

According to the IMF classification, hedge funds distinguish the following types of structures:

1. Relative value funds (operate using classic hedging strategies)
2. Macro funds (operate in specific countries)
3. Global funds

Any hedge fund has the following structure:

1. Investors
2. Bank guarantor
3. Asset Manager
4. Administrator (Auditor)
5. Prime broker

Watch also the video “the truth about hedge funds”:

The first investment fund of this type appeared about 70 years ago in the United States, as a private initiative of the American sociologist Alfred Jones. He did not set himself the task of becoming fabulously rich in this enterprise, but simply wanted to earn money to live and do what he loved by investing in the stock market.

He himself, as well as his friends and relatives, acted as shareholders of the fund. And his initiative, in the end, turned out to be a complete and unconditional success! Six years after the start of his investment activities, Jones published its results. Its average return was about 65% per annum, which was significantly higher than the profit of the largest investment funds of that time. Of course, many entrepreneurs followed this successful example, and by 1968 there were already 140 funds of this kind in the United States. Since this was actually a new type of investment fund, the SEC (American Securities Commission) was forced to classify it as a new structure. This structure was called a hedge fund (from the English word hedge - insurance, protection).

Why was it given this name? Let's return to the founder of hedge funds - Alfred Winslow Jones, or rather to his investment strategy. And this strategy consisted in the fact that he opened (buyed) undervalued shares (with great growth potential) and at the same time, entered into short sales of clearly overvalued shares.

Thus, during periods of economic growth, he profited from the growth of undervalued shares, and during periods of depression, from the fall in the value of overvalued ones. The simultaneous entry of both long and short positions was the main reason why the SEC assigned the prefix “hedge” to all funds of this type.

By the way, hedge funds currently operate using completely different strategies and have nothing to do with the concept of hedging.

Hedging is a trading tactic that involves opening multidirectional positions in different markets to compensate for losses in one of them and profits in another. Classic hedging involves opening positions on the derivatives market as opposed to positions on the spot market (for example, buying shares on the stock market is accompanied by selling futures on them on the derivatives market).

Moreover, the activities of hedge funds are often much riskier in nature than other types of investment funds.

Features of investing in hedge funds:

1. Not everyone can become an investor (shareholder) of this type of fund, but only a category of persons classified as professional (qualified) investors. To obtain such status in Russia, you must have investment capital of at least 3,000,000 rubles. American hedge funds can also attract investments only from professional investors. At the same time, the minimum share size for individuals is $5,000,000, and for companies (institutional investors) – from $25,000,000;
2. A hedge fund, by definition, has less dependence on government regulators (or is even completely unrestricted by any regulatory regulation). This, on the one hand, gives maximum degrees of freedom to its managers (which, with a competent approach, allows them to receive potentially greater profits from investments), but on the other hand, the lack of government regulation is fraught with additional risks for investors;
3. The huge variety of strategies and financial instruments available for funds of this type allows for the most flexible investment strategies. In comparison, regular mutual funds (MUFs) have the opportunity to invest only in a limited number of financial instruments (mainly stocks and bonds), while a hedge fund can also invest in precious metals, real estate, land, derivatives, FOREX, etc. .d. and so on.
4. Hedge funds can use borrowed funds in their activities, that is, trade using leverage. Such trading tactics can bring both increased profits and crushing losses (as demonstrated by the collapse of many funds during the 2008 crisis).
5. Another feature of investing in funds of this type is that the fund manager receives not only a fee in the form of a fixed percentage for managing investors’ funds (regardless of the performance results), but also a substantial percentage if the fund’s activities have brought profit (so called performance bonus).
6. Investing in such funds usually involves fairly long-term investments. The rules of the fund may contain a clause limiting the minimum investment period. This, in turn, negatively affects the liquidity of this type of investment (from the point of view of investors).

Hedge funds in Russia and in the world

Perhaps the most famous example of a hedge fund is Quantum. This fund was created by the now world famous investor George Soros. And what brought him worldwide fame was the fact that in 1992, the Quantum fund earned one billion dollars from the fall of the British national currency, the pound sterling. Moreover, he did this virtually in one day - on the so-called “Black Wednesday” on September 16, 1992.

The largest number of funds of this type are in the UK (the largest of which are AHL and GLG) and the United States of America (the most famous are Bridgewater Associates and AQR Capital Management). In total, these countries account for more than half of all hedge funds in the world (more than 55%).

In Russia, hedge funds have not yet gained such popularity and such mass distribution. This is partly due to the imperfection of the legislative framework regulating this area of ​​activity. We can say that the Russian analogue of Western hedge funds is general banking management funds (). They also have great freedom in choosing financial instruments and investment strategies, and are burdened with minimal government control.

Many Russian hedge funds are registered offshore, for example, the Otkritie Bank fund of the same name was registered in 2007 in Andorra. In addition, in our country there are such funds as: VTB Capital, Equinox Russian Opp Fund, Aton-Lite and others.

Types of hedge funds according to the classification of the International Monetary Fund (IMF):

1. Global funds can take positions in financial markets around the world;
2. Macro funds operate in financial markets within the borders of one specific country;
3. Arbitrage funds (relative value funds) can be called classic hedge funds, since their operating strategy most closely matches their name. The principle of operation is to open multidirectional positions on financial instruments related to each other and to profit from small convergences and divergences in their prices.

A hedge fund is a serious organization with a rather complex structure. It may include many divisions (auditors, legal consulting department, investment consulting department, analytical department, etc.), and it can work with a large number of partners (banks, brokers, investment companies, etc.).

However, in general terms, one can identify a certain basic structure, one way or another, characteristic of all fronts of this kind (see figure below).

Custodian bank is an intermediate link between investors and the fund. It is in this bank that accounts are opened in which all assets belonging to the fund’s investors are stored. As a rule, the most well-known banks with the highest reliability ratings play this role.

(English prime broker), through which, in fact, all operations on the financial markets are carried out. In addition, such a broker provides a number of additional functions necessary to support the activities of a hedge fund. A large investment bank or investment company can act as a prime broker.

Manager is the brains of the hedge fund. It is he who determines the tactics and strategy of investment, and the results of the fund’s activities ultimately depend on his decisions. His remuneration is quite substantial; it is directly tied to the profitability that the investment decisions he makes bring. It is believed that hedge funds have the most talented managers. By the way, the term “manager” can hide not just one person, but an entire division or even an investment company.

Administrator engages in auditing and independent assessment of financial instruments and fund assets. In addition, his responsibilities often include accounting, compiling and distributing reports to investors and other purely administrative activities.

Example of work and remuneration calculation

Let's consider an episode of a hypothetical hedge fund called, say, Plushkin & Co Fund. The rules of this fund stipulate the following points regulating the amount of the manager’s remuneration:

1. The commission charged by the fund from each of its clients for managing their funds is 2% per year;
2. If the fund's return exceeds 10% per annum, the manager receives a performance bonus in the amount of 20% of the total income for the year.

Let's assume that this fund attracted 20 investors, each of whom made a minimum contribution of $5,000,000. Thus, our fund managed an amount of $100,000,000.

All this money was placed in the accounts of the custodian bank and subsequently, by decision of the fund manager, was invested in the stock market (stocks and bonds). And a year later, the fund’s profit amounted to $30,000,000 (or 30% per annum).

According to the terms of the agreement with investors, since the threshold return of 10% per annum was exceeded, the manager receives a bonus in the amount of 20% of the total income. In addition, under the same agreement, the fund charges 2% for financial management.

Thus, the fund's income will be divided as follows:

• The fund will receive 22% of $30,000,000 (20% bonus + 2% commission), this will amount to (300,000,000/100)x22=$6,600,000;
• The fund's clients (investors) will receive the remaining profit in the amount of 30000000-6600000=$23400000. Since in our example the deposits of all clients were equal, the profit received by each of them will be an equal share in the amount of 23,400,000/20 = 1,170,000 dollars for each.

Such a financial structure as a hedge fund in the domestic economic understanding still remains a “dark horse”, the activities of which are practically unknown to the general public.

Some people perceive them as a way to secure their finances, others prefer not to get involved at all, however, if there is a structure, then it has some functions.

A hedge fund is a private investment partnership, the participants of which intend to maximize the income from the funds invested by investors in the face of existing risks or, conversely, reduce risks to achieve a set return. The purpose of the fund's activities is to obtain regular profits from the investments of depositors' funds, regardless of the market situation. Funds typically use both strategies, changing them as needed.

To achieve such goals, it is necessary to apply complex financial strategies, including, among other things, purchasing securities long or selling them short, leverage and others. The range of tools used is quite diverse and depends on each specific situation.

Investors' funds are predominantly invested in publicly traded securities, however, investments are not limited to this category; the source of future profit may be everything that can generate income:

• Earth;
• securities
• currency;
• commodity market and more.

At the same time, not every entrepreneur can use the properties of a hedge fund; only accredited or professional investors have access to the fund. Having at least $1 million in net worth.

Hedge funds in Russia

The domestic market is not very favorable to such financial institutions. Their profitability is often negative or very low. Hedge funds in Russia, for the most part, are represented by OFBUs, a significant part of which were formed back in 2008, immediately after the collapse of the stock exchange boom. The total number of such organizations in Russia is about 60, which is an order of magnitude less than in the United States.

This is largely due to the imperfection of the legislative framework. A significant part of the funds are registered offshore, which allows their participants to take advantage of the legislation of more liberal countries and protect their finances.

But even in such a difficult situation, there are funds with headquarters in Russia that receive stable profits at a high level.

• One of the market leaders VR Global Offshore Fund, whose profit for the year amounted to more than 30%. The company managed to achieve this level of profitability by blocking funds.
• In second place in terms of profitability is Diamond Age Atlas Fund, who earned a little more 20% total profit.
• On par with the previous fund, 20% brings profit and hedge fund Kvadrat Black.
• Follows him Copperstone Alpha Fund, earning 19,1% arrived.
• In fourth place is Burnem Asset Management, with a yield of 17%.

In general, these funds hold in their “reserves” about 80 percent of the assets available on the Russian investment market, and half of these funds belong to the most profitable player.

• Another popular hedge fund in Russia is the fund Extranet Investment. True, its popularity is rather negative. In 2015, the fund experienced certain disruptions, after which the personal accounts of investors were blocked. Today the site has been restored, but problems with payments, judging by the reviews, remain.

In addition to the “old guys,” young companies that adhere to active management strategies are also appearing on the domestic market. Having a short period of work, they cannot count on large investors who are ready to invest for a long period. But they have good intellectual resources, which, in conditions of fierce competition, will help them develop the right, partly even aggressive, strategy. The luckiest among them will then become leaders.

Hedge funds in the USA

American hedge funds traditionally occupy leading positions in the profitability rankings. This is easily explained by a long history of work and a well-thought-out legislative framework.

The largest American foundations manage funds amounting to about $1.5 trillion, while influencing the political and legislative activities of the state.

• Glenview Capital Opportunity, showing the profitability of the order 80 percent, in 2013, the fund's managers relied on reform of the healthcare system and bought up medical companies.

The top five largest American players also include:

• Millennium Partners L.P., which controls $180 billion in assets and relies on a combination of strategies to operate;
• Citadel Global Fixed Income Master Fund Ltd. works with instruments that have a fixed return;
• Black River Firv Opportunity Master Fund Ltd. deals with the supply of agricultural products, food products, financial and industrial results in all countries;
• Bluecrest Capital International Master Fund Limited, having investments in the debt and stock markets of America and England;
• Adage Capital Partners L.P., Based in Boston, it prefers trading stocks and bases its strategy on in-depth analysis of the intrinsic value of stocks.

Hedge funds in Europe

The European financial market, although large, is quite heterogeneous, and it can differ significantly in the western and eastern parts of the region. The largest and most profitable are British funds:

• ODEY EUROPEAN, profitability over 30%, assets of more than $2 billion;
• LANSDOWNE DEVELOPED MARKETS, holds about 9 billion, profitability is more 18% ;
• VR GLOBAL OFFSHORE, profitability over 30%, the amount of assets is about 2 billion;
• PELHAM LONG/SHORT, has assets worth 3.2 billion, profitability 19% ;
• THE CHILDREN'S INVESTMENT$7.3 billion, yield 30% .

There are also funds that have an international team, including representatives from the United States. For example, a hedge fund like Brevan Howard, comprised of five core founders whose company operates on conservative investments while delivering consistent results.

Watch also a video about hedge funds, their work scheme and differences from mutual funds:

Greetings! Today we will talk about another way of investing - hedge funds (not to be confused with hedging). True, for Russia this is still more of a sophisticated curse than an investment option. But who knows what will happen in five to ten years?

What is a hedge fund? This is a special type of private investment fund. English word "hedge" can be translated as “protection, insurance or guarantee”. But this is a trap for dummies! Investing in a hedge fund is considered one of the riskiest investments.

In essence, this is a good old association of investors committed to collective investments. The main difference between a hedge and a regular one is wider opportunities. Hedge funds work in stocks, bonds, futures, options and currencies. Moreover, managers of such a fund can make a profit in both a growing and a falling market!

Hedge funds in Russia

In Russia, a hedge fund is one of the formats. To gain access to the entire “range” of instruments, managers register them offshore (for example, in the Cayman Islands).

The first Russian hedge fund was created relatively recently - in 2009. Founded the “Private Investment Fund 05.09” of the Alfa Capital Management Company in the form of a closed mutual fund.

Another “pioneer” appeared in Russia in the same year with the support of Europe Finance. The DRG fund operates using the Managed Futures strategy, which is very popular in the West.

A kind of analogue of a classic hedge fund in Russia can be considered OFBU (general funds of bank management). Unlike mutual funds, these types of funds can use an aggressive investment strategy and invest money in.

But in Russia the hedge fund industry is still in its infancy, and therefore is not very popular. Our managers lack basic experience, and Russian legislation has not yet definitively established the rules of the game. It is still too early to judge the effectiveness of Russian funds - there is too little statistical data for serious analysis.

For comparison, the first hedge fund in the United States was created in 1949 by Alfred Winslow Jones. It was he who first guessed to combine long positions (playing for a rise) with short ones (playing for a fall).

The main differences between a hedge fund and a mutual fund:

1. The minimum entry amount into a hedge fund starts from several hundred thousand dollars (from a thousand rubles in a mutual fund)
2. Through a hedge fund, an investor can invest in dozens of instruments (in a mutual fund, his choice is limited to securities, gold and real estate)
3. The hedge fund works with both long and short positions (only long positions in the mutual fund)
4. The activities of a hedge fund are practically not regulated by the state (the mutual fund is under strict government control)
5. Only qualified (accredited) investors can invest in a hedge fund (anyone can become a participant in a mutual fund)
6. The hedge share is sold only within the fund (mutual fund shares are allowed to be sold on the secondary market)

What does a hedge fund consist of?

In any hedge fund, firstly, there are investors. Without which, naturally, there would be no fund at all. It is the investors’ money that is invested in various instruments, providing profit to both the participants and the hedge itself.

Secondly, the structure of any hedge fund includes a guarantor bank (or custodian). It is in this bank that investors’ assets will be stored: money, precious metals and securities.
Third, the development of a hedge investment strategy is undertaken by the asset manager. Specialists of the management company are responsible for the operating activities of the fund: purchase and sale of shares, bonds, futures, options and other financial instruments.

Fourthly, in a hedge fund there is still such a “position” as an auditor (or administrator). It is needed for an independent assessment of the value of assets in order to reduce the risk of mistakes on the part of the manager from point No. 3. In Russia, the administrator often also plays the role of an accountant: he maintains accounting records, sends out reports to investors, pays bills, and subscribes to fund shares.

And finally, any large hedge fund has a prime broker (an investment bank can also play this role). The primary broker's task is to help the fund quickly solve a variety of problems.

How much can you earn with hedge funds?

I will give you several relatively recent examples published in Forbes.

In 2013, the family hedge fund Soros Fund Management of “retired” George Soros brought him a return of 22%. That year, the founder of the fund earned about $4 billion on investments. Moreover, most of the profit was brought to him by playing to reduce the Japanese yen.

David Tapper, a former Goldman Sachs trader, made $3.5 billion that year (a 42% return on investments through his Appaloosa Management fund). By the way, over the past five years, David Tapper's fund has shown a net average annual profit of 40%.

How to buy shares of a foreign hedge fund?

First, accumulate several hundred thousand dollars (the minimum amount of investment in Western hedges).

And secondly, purchase units or shares of the hedge through (you will have to open an account there) or through a Russian intermediary agent with access to large hedge funds abroad.

According to Bloomberg, at the end of October this year, hedge funds began betting on the strengthening of the ruble for the first time since July 2015. Let's hope they're not wrong.

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