Because of the Internet, investors are self-organizing in a manner never before possible. They have access to information that was once closely held by financial institutions and professionals. The World Wide Web is empowering investors to be better informed, more intelligent and more demanding of the traditional Wall Street firms. As a result of the information now available to investors, they are becoming knowledgeable and therefore powerful.  The Hedge Fund Center has created a manifesto related to hedge fund investing. We invite members and managers to comment on and contribute to our initial theses.    

1. Hedge funds deserve a place in most investment portfolios.    

2. Investors in hedge funds are partners, not assets.    

3. As partners, investors are entitled to know as much about the firm, strategy, and manager as is realistically possible.    

4. Secrecy is not an option; arrogance is only an excuse.    

5. Investors should seek information because they need it to make an informed investment decision, not because they feel compelled to ask for it.    

6. Investors have no interest in replicating a manager’s strategy.    

7. Reporting should meet the investor’s expectations, not the manager’s needs.    

8. Client service is not an oxymoron.    

9. Honest dialog between investors and manager can produce benefits for both parties.    

10. No one knows a product or service better than a customer does.    

11. Managers have the right to withhold information from clients only if such information provides the managers with a real — not perceived — proprietary advantage in the market.    

12. Clients must respect a manager’s need for privacy, but only in so far as that need is real and not perceived.    

13. No manager is irreplaceable; mean reversion is a dogmatic truth.    

14. If an investor does not understand how a manager generates returns, he/she should not invest with the manager.    

15. Timeliness is next to godliness.    

16. Transparency is a virtue.    

17. Managers and clients should work together to debase the high-roller/high-risk myth associated with hedge funds.    

18. Leverage is a wonderful thing — when there are sufficient risk controls in place.    

19. Being wealthy does not make a person smart.    

20. Good performance is a necessary but not sufficient condition for investing with a manager.    

21. Investors should perform due diligence on the agents representing hedge fund managers.    

 22. Carefully vet third-party marketing agents; they are not all created equally.   

Copyright © 2000 Fund-Investors, L.L.C.





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