As an investment professional, there are “targets” that are used to gauge the relative success of the investment strategy. The most common of all of these “targets” is the S&P 500. Investing professionals base their performance by how well they can exceed the gains posted by the S&P 500 index each year. This is a tried and true milestone, one that is honored and respected as the performance basis of most main stream investing concepts.
Even if the S&P falls to a negative return for a fiscal year, the fund or portfolio managers’ performance is gauged by how well he has avoided losing as much as the S&P did. Yet to coin a phrase, “this isn’t your daddy’s market any longer.” Newer, more dynamic investing parameters and vehicles have allowed for much greater returns, and everyone is familiar with the term “hedge fund”.
A true hedge fund literally hedges their long positions with short positions so that in a sense they are “insured” to some extent against losses. But in the real world, everyone is looking for absolute returns and this is where the best of the best hedge funds really shine. In a given year where the S&P might rise say 7%, it’s not uncommon for the best hedge funds to return 18, 20, 28, 35 and even 40%.
Until now, there has been no performance based standard for the hedge fund industry. That is no longer the case however. Fund.com is changing all the rules, and making Wall Street take notice. First, let’s dispense with the formalities, so we all know just who we are dealing with. Fund.com Inc. is an online financial information publisher focused on the $22.6 trillion investment fund market. As an online media company, Fund.com is establishing a destination website of personal finance channels, including mutual funds, hedge funds, money market funds, exchange traded funds (ETFs), closed end funds, commodity funds and other types of pooled investment vehicles.
All of that is incredibly interesting and there is certainly a lot of take away we will glean from it. But that’s for another day and another article. What I’m focusing on right now is something so new and so exciting, that it over rides the other opportunities they provide. Imagine this, how about a new Index? Fund.com’s wholly owned ” Fund.com Managed Products, Inc” specializes in developing asset management products. The most exciting in this editor’s view is the new EQUITIES Hedge Fund Index. How about an index that takes the performance of the top 25 hedge funds, so that investors have a new “target index” to track and compete against? This is new, and it’s going to make huge waves in the pool of investing.
In just the past 17 years, hedge funds have gone from having approximately 8 billion dollars under management, to somewhere north of 2.25 Trillion dollars worth presently. High net worth individuals and other sophisticated investors were early adopters of the hedge fund evolution, and hedge funds have proven themselves to be an incredibly useful tool in overall portfolio management. Yet for the accredited investor, it’s been nearly impossible to judge the performance of these funds, and decide if the fund manager controlling the money has been “beating the averages” or even “keeping up with the Jones’s”
Fund.com’s analytics partner compiles the Index in consultation with Equities Magazine, lending brand recognition and integrity to the Index. Fees are generated by third party product providers that license the use of the Index for their services. Fees are paid as percentage of the assets under management that are benchmarked to the Index. This is exactly how index’s like the S&P generates licensing fees for Standard and Poor’s.
As an internet company specializing in financial information, Fund.com can attract more and more of the growing investment class, and couple them with innovative products such as the EQUITIES hedge fund Index. This is a groundbreaking development is sure to create an urgency among the investing populace as they clamor to judge the relative performances of the various hedge funds available.
This is a development whose time has certainly come and Fund.com is going to reap the benefits of a product desperately needed by individual investors and professional money managers alike. No hedge fund manager is going to want to be left behind, and will gladly pay the licensing fees for the ability to show his clients where he ranks in relation to the “benchmark” index. Likewise, no accredited investor will want to place his money in a firm that can’t prove their performance in relation to the index.
Fund.com has certainly come up with a product that in our opinion will be very much in demand, and as Jim Cramer of CNBC fame has said “You guys at EQUITIES are doing some fabulous stuff”. I happen to agree. Keep an eye on Fund.com for even more interesting developments, it’s going to be even more “fabulous.”
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