Recently enacted rules allow some hedge funds to advertise. With this new step, it becomes increasingly important for investors to complete their due diligence on all investments – including hedge funds – before investing. MFA recently highlighted a number of items to think about, and some potential red flags to look for, when considering a hedge fund investment.
Today, the Wall Street Journal also listed a number of important questions to ask before investing in a hedge fund. The list offers readers seven questions tied mostly to the fund itself. These questions include:
- What is the hedge fund’s strategy and can it change?
- What are the returns and track record like?
- Who is behind the fund?
- What are the fund’s fees?
- Who else is in the fund?
- What access will you have to your money?
- What are the tax implications of this investment?
It is important to note that these are but a few of the questions to consider before pursuing an investment with a hedge fund. MFA’s Hedge Fund Due Diligence presentation offers a number of other items to consider as you continue your research.