MFA Blog

Wall Street Journal Highlights Questions to Consider Before Investing in a Hedge Fund

Posted on October 3, 2013

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.