The Hedge Fund Resource Network your No. 1 source for domestic & offshore fund formation, hedge fund website design, and hedge fund consulting.

Domestic Fund Formation It is a simple process to enter the hedge fund industry; practically anyone with $15k to $20k can start a hedge fund and forming a hedge fund gets easier every year.
Offshore Fund Formation An offshore hedge fund is simply a structure used by hedge fund managers as a way to attract offshore investors (non-U.S. citizens) or U.S. tax-exempt investors such as pension and endowment funds.
Hedge Fund Blog
Best hedge fund ever?
Best hedge fund? Just returned from a due diligence visit to the best ever hedge fund. On the way I saw some black swans and ate at a restaurant that had run out of rice. Minor observations can signal major opportunities. Volatility is never contained and reverberates across ALL asset classes. Many commodities have risen but wide fluctuations do not bode well for economic stability. How to define “top fund”? AUM? A list of the best funds is very different to a list of the biggest. Historical performance? Future outlook? Highest past risk-adjusted returns? Below is the chart of a...
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Search for alpha?
Absolute return? Investors need alpha because beta isn’t reliable. A portfolio of long only relative return stock and bond funds can lose money over extended periods and is too risky anyway. Fortunately there is a solution – alpha from the skills of the world’s best fund managers. It would be good if beta does eventually perform but we need the “hedge” of alpha for when it doesn’t. Diversify away volatility and risk with return sources that don’t depend on the economy to make money.History is a powerful persuader but poor predictor. The 20th century...
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Bernie Madoff hedge fund?
Bernie Madoff “managed” customer accounts as a stockbroker. He did not run a hedge fund and had no connection whatsoever to the hedge fund industry. His firm was “regulated” and fraud has been illegal for centuries. Real due diligence itself is an alpha source. Wide manager diversification with many strategies is mandatory for risk averse investors. Why do some people think the scandal has anything to do with hedge funds? It was always odd that Bernie didn’t set up a hedge fund if he was so good. No incentive fees, no prime broker, no proper auditor and no...
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Trend following?
Some mathematical models actually do work. Here’s a proprietary black box equation that has served me very well over the years: good hedge fund + bad year = buying opportunity. But most investors do the opposite and redeem! As I forecast in late 2008, most hedge funds went on to perform very well in 2009. Remember the “experts” who said the hedge fund industry was “finished”! Those fools are welcome to their beloved, dangerous and “cheap” index funds.It’s no surprise that market dislocations, misvaluations and panic-selling hysteria created...
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Bull market?
Bull market? Financial planning is about achieving client objectives and good hedge funds have delivered superbly. Over 3,000 hedge funds had POSITIVE returns in 2008 but zero long only equity managers. It’s best to invest in quality so I’ll stay in the safe haven of skill-based strategies NOT asset classes. Every sophisticated institution I deal with is INCREASING investment in alpha. Good riddance to beta repackagers pretending to be hedge funds. The hedge fund industry is stronger than ever despite many “experts” predicting its demise…again.2008 was a GREAT...
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High frequency trading?
High frequency trading? Ironic the highest LONG TERM returns came from SHORT TERM strategies. My preferred holding period is forever but it’s rarely feasible and NEVER optimal. So that is why I consider having a substantial allocation to HFT to be essential. Market volatility, creative destruction, industry innovation and economic instability are always present. Low frequency trading doesn’t diversify enough so investors also need high frequency strategies. New time horizon alphas reduce risk. Invest across the entire holding period continuum.It’s much SAFER to hold a stock...
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Emerging market?
Emerging markets have done well. Most investors used to focus on “developed” nations due to the Asia crisis, Russia default and 1990s bubble. They missed high returns “overseas” but endured the uncompensated risk of “safer” home markets. I try to buy when securities ANYWHERE are cheap and sell when expensive but most emerging and frontier newbies do the opposite. That’s great since they make more alpha available. No “lost decade” for truly GLOBAL portfolios that ignore absurd “global” weightings. Anyone that treats emerging...
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Alpha versus beta?
Asset allocation is NOT the primary driver of portfolio returns. Many say it’s almost all that matters but the landmark studies are dangerously flawed. That mistake has dominated portfolio construction for too long and has wrecked retirement systems the world over. Trillions are misallocated due to such nonsense.It was a BIASED sample conclusion because asset allocation is what the CHOSEN investors already focused on. In contrast smart investors pay attention ZERO attention to asset class allocation and focus on to long short security selection and market timing. Good hedge funds select...
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Asset allocation?
Asset allocation? Wait for the “long haul”? Short term volatility can’t be ignored regardless of time horizon. It can be avoided with prudent strategy and manager selection. The endowment model was once seen as the “solution” to investing for the long term but it was deeply flawed and overexposed to recession. It was too long biased, illiquid, unhedged and high risk.Though asset diversified it was not properly strategy diversified. The “alternative” assets failed to offer alternative returns. The RETURN ON RISK of David Swensen’s folly, even in...
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Hedge fund?
Hedge fund? Despite vastly superior risk-adjusted returns after fees, skill-based strategies continue to be avoided by most. Stocks may eventually go up (or down) but why wait decades to find out? Since this blog began it’s been great dialoging with many interesting people I might never have met. Away from the blogosphere I was busy helping investors make money and reduce risk. Developing portfolio rescue strategies and liability solutions takes time. Fiduciary duty is attempting to preserve client capital. Does long only? It’s better to hedge.Don’t let the beta behemoths...
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