Earlier this month the SEC removed the ban on hedge fund advertising.

Expect to see lots of ads from hedge fund promoters. But should you invest? At Successful Portfolios we believe the answer is probably not. First, realize that hedging is really not what hedge funds are all about. A performance fee for the manager is what most differentiates hedge funds from mutual funds. Typically performance fees are set at 20% of hedge fund profits. In addition to performance fees there is typically a 2% annual fee on net assets as well. Together these are called “two and twenty” and they can take a hefty bite out of your returns. Moreover, hedge funds can be quite tax-inefficient for individual investors.

On the other hand, without a doubt there are some decent hedge funds out there. At Successful Portfolios we manage five hedge funds. We invest our own capital right alongside our investors. We strive for tax-efficiency by limiting portfolio turnover and harvesting tax losses when appropriate. And we don’t charge performance incentive fees. And our performance is reasonably good. Download our Hedge Fund Fact Sheet and take a look. Give us a call if you have any questions. Please note Successful Portfolios hedge funds are only available to qualified accredited investors.