How to Invest in a Hedge Fund

Video Transcript

"Not for the faint of heart! Today we're going to be talking about Hedge funds. Hi, I'm Roger Groh with Groh Asset Management. If you pick up the New York Times or the Wall Street Journal, you're bound to read stories about "Hedge Funds," quote, unquote. Some of which have gone up a lot and some of which have been disasters. The moral here is be very careful. This is a very unregulated business where portfolio managers can take your money and do pretty much what they please. That may not suit you. I'm urging you to be very careful as you go forward in this. But why buy a Hedge fund? Why is it significantly different from say, a mutual fund? Well, in a Hedge fund, investments can be much more focused and that may be a good thing in a slower growth environment like we will probably have globally over the next many years. In addition, they have the chance to short various portions of the market, and again that may be beneficial to a portfolio. Last but not least, they can also buy private companies, and why might that be good? Sometimes private companies are even more valuable then public ones and you get a little more pop in your portfolio. But be very careful. Read the paper. There are lots of horror stories about investing in in Hedge funds. Diversify. Put a little bit of money in each. Be prepared to lose all of that money. I'm not saying you will, but if you're prepared to do that, and you keep it a small percentage of your overall portfolio, you should be fine. I'm Roger Groh and that's a little bit about investing in Hedge funds. Thank you very much for spending time with me."