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Hedge Funds For Dummies (For Dummies (Business & Personal Finance))
Ann C. Logue

For Dummies, 2006 - 360 pages

average customer review:based on 6 reviews
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   highly recommended  highly recommended





Fasten Your Seat Belts

Wow! This book sets a new standard for the "...For Dummies" series. It goes well beyond what you would expect from a book with such a whimsical title. Ann Logue is smart, her research is solid, and her writing is perfectly colloquial. No BS, no jargon. If you don't have an MBA, or if you earned it before hedge funds entered the scene, take Logue's corporate finance tutorial, meaning start from the beginning. If you don't need the background, then jump to Part III, beginning on page 165, dealing with hedge fund strategies. This book covers the history of hedge funds, their regulatory aspects, asset allocation, risk management, the Greeks, transparency, due diligence, and perhaps the most important aspect, where does the alpha come from? Read it for fun; read it for self-defense, or prep yourself for an interview, but do read it.


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Credible Look at Basics of Hedge Funds

This book covers all the bases that an investor should consider before deciding to invest. They are too numerous to mention here, but in this 342-page primer, the author clearly explains the critical information necessary to make an informed decision as to whether a hedge fund is for you.

Hedge funds have been in the news lately, but not necessarily for their supposed out performance characteristics. Nine hedge funds (for example, Amaranth Advisors) have closed their doors in the past year, some because of outsized bets by traders on the wrong side of the markets they were trading. This is not the way to increase performance. In 1998, Long-Term Capital Management blew up, even with two Noble-prize winning economists on the staff. All hedge funds are not alike and there risks that need to be taken into account.

Hedge fund assets are estimated to be $1.2 trillion with over 9000 funds in existence. For most investors, due to the stringent entry requirements, hedge funds are not an option. Wealthy individuals who may be interested in hedge funds are urged to read this book (as well as others interested in learning about the subject) before placing their hard-earned money at risk. This suggestion may save them millions of dollars in potential losses, if they decide not to invest in certain hedge funds because of their due diligence learned from this book.

Additionally, the author provides insight on setting up your own hedge fund portfolio by selecting different categories of investments. Surprisingly though, she spends a miniscule amount of time discussing exchange traded funds (ETFs) to build the hedge fund portfolio. Now that there over 425 ETFs offering all types of investment alternatives, this is one area that deserves more attention.

Overall, the author provides a credible and detailed look at the hedge fund industry. An investor needs to know the basics before committing any money to these funds. This book provides useful information to help in making the decision to invest in hedge funds.



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fair value

I just finished the book. For the beginner, I think it's a good investment. For me personally, I would have liked more depth in certain areas'. There's alot of "filler", and when you're finished you still won't actually know enough to make serious money on your own.






Great for Hedge Fund Managers Too!

Hedge Funds for Dummies seeks to create a "reference for the rest of us" on how to use hedge funds to improve portfolio performance. However, as a founder of a Private Investment Fund, this book really makes one think about all of the elements that you need to consider when potential investors are kicking your fund's tires. My copy is dog-eared and has writing throughout the margins. Regardless of whether you are thinking of starting a fund or thinking about investing in a fund, this book will be an excellent resource.


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An excellent overview of hedge funds in the US

As its tagline suggests, the FOR DUMMIES series is "a reference for the rest of us". Each introductory book has been designed to teach dilettantes as much as possible, in the shortest amount of time. A word of caution though, the FOR DUMMIES series is only `for dummies' in a relative sense. While the author, Ann Logue, laments the simplicity of the series, she also explains that Hedge Funds FOR DUMMIES is intended for an inquisitive, yet intelligent audience. The significance of this became increasingly apparent as I progressed further through this book.

Logue appears aptly qualified to author this text with more than 12 years experience as an investment analyst. Her qualifications include the Chartered Financial Analyst (CFA) certification and an MBA from the University of Chicago. In terms of her approach, she refreshingly engages the audience with a combination of colloquial wit and academic rigour. The only significant fault I could find is that she excessively repeats the basics, though this may be fitting for readers without a diverse investment background. Overall however, I believe Logue's unique style and objective opinions would make this book a worthwhile addition to any investor's collection.

The book begins with an ever-present question: what is a hedge fund? While the answer may be obvious to some, a lot of detail regarding the genesis and advancement of hedge funds is presented. One of the more interesting stories is that of a hedge fund operated by two of the US's most acclaimed and eminent finance professors; Robert Merton and Myron Scholes. Their fund profited from arbitrage trades in the bond market and ultimately collapsed due to a default on Russian treasury bonds. Was this collapse testament to the `random walk' of equity markets, or just the impropriety of the Russian Government? This is a question raised by only one of the many chronicles that Logue uses in her definition of hedge funds.

Prima facie, Logue's definition is more than adequate, but the early and repeated use of the term `investment partnership' piqued my curiosity. Worldly readers may know that while a partnership is a legitimate Australian business structure, it is more common as an American managed fund structure. The somewhat unfortunate implication of this is that the book is actually intended for an American readership. For Australian readers, this becomes increasingly obvious with US-specific discussions regarding taxation, superannuation, regulation and legal structure. Although this is confined to very few chapters, I did find myself skimming entire pages. However, all is not lost; this book still repeatedly surprises.

The major source of surprise is the depth of detail; this aspiring tome relinquishes its `introductory text' classification and rigorously investigates a range of investment topics (albeit in the context of hedge funds). The latter sections may begin with trivialities, such as the definition of alpha, but they promptly turn to challenge the reader by uniting academic theory, popular belief and the author's personal views. It was in these latter parts that I began to put the `for dummies' moniker into true context. Logue strives to `keep it simple', but at times she had me reaching for my university texts to revise Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM). I suggest that readers without a finance background at least engage a primer on managed funds (or mutual funds, as per the American lexicon).

As I became more comfortable with Logue's unique style and progressed further through the book, I found myself forgetting its American context and really enjoying the flow of information. After the formalities of defining a hedge fund, Logue presents a range of topics that get `under the hood' of these mysterious investment vehicles. One of Logue's more practical arguments discusses hedge funds as a unique asset class. She asks if we should place hedge funds in the same context as equities, fixed-income and property. In her true style, she presents the options, explains her opinion and then qualifies these with a discussion of Markowitz's portfolio theory. After this, the topics get quite technical for the layperson; ranging from the 11 possible ways to arbitrage equity markets, through to considering how hedge funds profit from the corporate lifecycle. Logue's constant quest to investigate all options while referring to academic theory kept me interested, even amongst unwanted references to US-specific details.

To answer whether this book achieves its purpose really depends on the locale of the reader. For the typical Australian investor, this book does not adequately educate on investment into local hedge funds. The funds in Australia are based on a different legal structure and must comply with dissimilar tax legislation and financial regulation. Despite this obvious downfall, the use of US-specific information is not nearly as ubiquitous as Logue's insightful annotations. While it does take some effort to decide what to dismiss and accept, my memories of this book are still described more by superlatives than shortcomings.

In summary, I sincerely enjoyed Hedge Funds FOR DUMMIES, especially its depth of content, the author's style, and her meticulous approach to forming arguments. Essentially, it is based on this experience that I recommend this book to budding investors worldwide.



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If you want to diversify your portfolio and lower your risk exposure with hedge funds, here?s what you should know: Hedge Funds For Dummies explains all the different types of funds, explores the pros and cons of funds as an investment, shows you how to find a good broker, and much more.

Authored by Ann Logue, a financial writer and hedge fund specialist, this handy, friendly guide covers all the bases for investors of all levels. Whether you?re just building your first portfolio or you?ve been investing for years, you?ll find everything you need to know inside: What a hedge fund is and what it does How hedge funds are structured Determining whether a hedge fund is right for your portfolio Calculating investment risk and return Short- and long-term tax issues Developing a hedge fund investment strategy Monitoring and profiting on macroeconomic trends Evaluating fund performance Evaluating hedge fund management

If you?re investing for the future, you definitely want to minimize your risk and maximize your returns. A balanced portfolio with hedge funds is one of the best ways to achieve that sort of balance. This book walks you step by step through the process of evaluating and choosing funds, incorporating them into your portfolio in the right amounts, and making sure they give you the returns you expect and deserve. You?ll learn all the ins and outs of funds, including: What kind of fees you should expect to pay Picking a hedge fund advisor or broker Fulfilling paperwork and purchasing requirements Performing technical analysis and reading the data How to withdraw funds and handle the taxes Tracking fund performance yourself or through reporting services Hedge fund strategies for smaller portfolios Performing due diligence on funds that interest you

This friendly, to-the-point resource includes information you can?t do without, including sample portfolios that show you how to invest wisely. Hedge funds are an important part of every balanced portfolio, and this friendly guide tells how to use them to your best advantage. With important resources, vital information, and commonsense advice, Hedge Funds For Dummies is the perfect resource for every investor interested in hedge funds.


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