Myths & Facts

Hedge Fund Misconceptions

Hedge funds are often perceived as unregulated, risky and excessively-leveraged investment vehicles that lack transparency.

Let’s examine some of the most common misunderstandings:

Misconceptions

  • They are unregulated
  • They are very risky
  • They charge excessive fees
  • They have long ‘lock-up’ periods
  • They lack transparency

Reality

  • Established providers are regulated at the manager level
  • Can provide superior diversification/downside limitation
  • Performance fees only levied when ‘earned’
  • Range of liquidity profiles available according to strategy
  • Disclosure is improving but data interpretation is complex
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