Ask HN: Are there hedgefunds for ordinary people?

deanalevitt 7y ago ↗

To invest in a hedge fund, I believe you need to be an accredited investor. Basically, you need to make over $200k a year or have a $1,000,000 excluding your primary residence.

I'm assuming you don't consider an accredited investor to be "ordinary" in this context.

Mutual funds (and ETFs) operate relatively close to how hedge funds do, but without the risky behaviors and aggressive speculation. So, I guess, a mutual fund is probably a hedge fund for ordinary people, if you take ordinary to mean someone unable weather losing a ton of money in risky investments.

I think you can probably find some ETFs and mutual funds that take highly risky stances or short sell (inverse ETFs) and those are often open to small investments. I'm not going to share them because, well, I have no idea if they're worth putting money in.

justaguyhere 7y ago ↗

So basically I don't have to have any qualifications to gamble in Vegas, but I need to have a million dollar home if I want to invest? Interesting.

komon 7y ago ↗

<Wild Armchair Speculation> It comes down to what you're allowed to advertise I think. Vegas doesn't (and probably legally could not) market itself as a legitimate money-making investment, it's just selling games. Gambling = Entertainment expenditure with the possibility of prizes.

Meanwhile, hedge funds do market themselves as legitimate money-making investments, even if there is some risk involved. Unlike Vegas, who may welcome all comers who might pay the fee, hedge funds hold a fiduciary responsibility to act in their clients' best interests. That means having a policy on minimum assets or income to ensure that the clients whose money they are legally required to act in the best interest of would be able to somewhat safely absorb the losses associated with the short-term, higher-risk investments a fast-moving hedge fund might make.

On a different tack than marketing and fiduciary responsibility, nobody can sue Vegas when they bet it all on black and take a dive. Casino managers don't get daily calls from their patrons asking why the dealer keeps winning at blackjack. Hedge Funds ensuring that the people they're dealing with have lower income worries and likely some investment experience probably reduces their customer service load by a lot.

Although, after typing all this, it seems I was answering the question "Why is it alright for hedge funds to have minimum qualifications on investors?" rather than the question I think you were originally asking, "Why is it okay for Vegas to let people gamble without so much as a credit check?"

bcb1276 7y ago ↗

I’m a lawyer who worked for years at a hedge fund. (Also private equity funds). You can probably find one or more low cost ETFs that pursue whatever strategy(ies) you find interesting. You won’t have to deal with filing a K1 (partnership tax return) on unrealized gains. And it will probably our perform given among other things the much higher fees you’ll pay in hedge funds. I strongly suggest you don’t invest in hedge funds.

rahimnathwani 7y ago ↗

If I were looking for something like this, I would probably use these search terms:

- leveraged etf

- long short etf

hijinks 7y ago ↗

The definition of a hedge fund is a fund that takes high risks for the benefit of high capital gains. The average investor shouldn't be in a hedge fund and should stick to something like index funds.

natalyarostova 7y ago ↗

Not really. Technically firms like Blackrock do offer quant funds for normal people, which are, in theory, run like a hedge fund and use quant hedge fund type strategies.

In reality, these have no consistent record of outperforming index funds after fees. Many of the more boutique strategies are too small for them, as they are running billions of dollars.