Pat Huddleston, Investor's Watchdog
The title is imposing — Hedge Fund Manager. It implies a vast yet intricate knowledge of the capital markets. It implies experience in managing the assets of multi-millionaires. It implies success. All of those implications may be false.
In fact, for managers with less than $25 million under management, becoming a hedge fund manager requires nothing more than the nerve to claim the title. While the SEC has recently taken action to impose some minimum level of oversight in the hedge fund arena, the SEC still does not require a minimum level of experience, education, or training for most managers.
That is not to say that all hedge fund managers are unqualified. Some, no doubt, have the necessary knowledge and experience. But, how to tell the good ones from the bad ones? Certainly not from the sales pitch or the glossy brochure. Charisma bears no relation to character, and anyone can go to a printer and walk out with a glossy brochure.
IW’s founder represented a client in a case in which the hedge fund manager’s only post-college certification was as a professional golf instructor. The fund performed like a hedge fund managed by a golf pro. [article continues...]