3C1 is a type of hedge fund that invests in three different types of assets: commodities, currencies, and credit. This type of fund is designed to provide investors with exposure to a broad range of asset classes, while also hedging against potential downside risk. The “3C1” in the name refers to the three asset classes … Read more
A lock-up period is a period of time during which an investor is not allowed to sell, trade, or otherwise transfer their investment. This is usually put in place by hedge funds in order to prevent investors from withdrawing their money early and to allow the fund manager to have a longer-term investment horizon. Some … Read more
A fund of funds, or FOF, is an investment fund that holds a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. The individual funds in a fund of fund’s portfolio are typically chosen by the FOF manager. A fund of funds offers investors several advantages. First, it provides … Read more
Portfolio insurance is a type of financial protection that can be used by investors to safeguard their portfolios against potential losses. It is most commonly used by institutional investors and high-net-worth individuals. Portfolio insurance works by using derivatives contracts to create a “synthetic” portfolio that is designed to mimic the performance of the underlying portfolio. … Read more
A money manager is an individual or professional who makes investment decisions on behalf of their clients. Money managers can be either discretionary or non-discretionary. Discretionary money managers have the authority to make investment decisions without prior approval from their clients. Non-discretionary money managers must get approval from their clients before making any investment decisions. … Read more
A placement agent is a firm that helps hedge funds raise capital by connecting them with potential investors. Placement agents typically charge a fee for their services, which is typically a percentage of the total amount of capital raised. Placement agents play an important role in the hedge fund industry, as they help connect hedge … Read more
The return of capital refers to the portion of a fund’s distribution that is not considered a taxable event. This is because the distribution is not considered income, but rather a return of the investor’s original investment. The return of capital is an important concept for hedge fund investors to understand, as it can impact … Read more
A performance fee is a fee charged by a hedge fund manager for generating positive returns on investment. This fee is typically a percentage of the gains earned by the fund, and is paid out of the fund’s assets. Performance fees provide an incentive for managers to generate strong returns, but can also lead to … Read more
Net exposure definition is the percentage of a hedge fund’s assets that are invested in long or short positions. A fund with a net long exposure of 60% has 60% of its assets invested in long positions and 40% in short positions. A fund with a net short exposure of 60% has 60% of its … Read more
Instant history bias is the belief that the recent past is a good predictor of the future. This bias can lead investors to make poor decisions, such as chasing after hot stocks or investing in a company that has recently had a string of bad news. The instant history bias is often seen in the … Read more
