Street.Com – With regulators raising the bar for hedge-fund investors, there’s never been a better time to consider mutual funds that try to produce consistent returns byzigging when the market zags.
Hedge fund fees have always been off-putting — they typically charge hefty 2% management fees and also keep 20% of any profits they earn for investors. Investors may also object to having their money locked up for a year or more.
But now the Securities and Exchange Commission wants to redefine who is rich enough to invest in hedge funds; earlier this month it proposed redefining “accredited investors” as those with a net worth of $2.5 million, compared with $1 million currently.
In reality, you have to be more than just comfortably well-off to invest in hedge funds, since $1 million is just the price of admission for many of them. But in recent years it has become easier to get a foot in the door through funds that pool investor capital to invest in other hedge funds. The proposed rule would severely limit the potential investors in these funds of hedge funds.
