HEDGE FUNDS
The proliferation of Web sites devoted to hedge funds - obscure private investment pools available only to institutions and accredited individuals (i.e., millionaires) - seemed beside the point before the stock market started to tank. Now it's looking like a godsend. The best of them, HedgeWorld.com, gives high net-worth investors the tools they need to prosper whether the market soars or sinks. Better yet, it points toward a future in which the rest of us can do the same.
Freedom from restrictions that govern mutual funds - especially disclosure requirements and limits on the exploitation of options, futures, and short sales - makes hedge funds risky. It also makes them profitable. The average hedge fund gained 7.54 percent last year, according to the Hennessee Group, which monitors hedge-fund performance. During the same period, the Dow lost 5.6 percent, the Nasdaq 39.72.
HedgeWorld.com lifts the veil on this exclusive and often secretive world. Registration, which is free, gives accredited investors access to the TASS database, a Morningstar-like trove of performance and management data. For everyone else, there's astute news coverage, email alerts of fund offerings, portfolio tracking, and an active message board.
The innovative kernel of the site, however, is the HedgeTrust Exchange, a sort of eBay for hedge fund positions.The Bermuda Stock Exchange aids in the clearance and settlement of HedgeTrust transactions, lending an extra dose of credibility.
"Access to information on the Web closes the massive gap between hedge funds and other investments," says Ben Borton, head of portfolio management at Hedge Fund Research. "Hedge funds are bound to become more mainstream."
Borton's notion isn't entirely outlandish. Part of the reason the SEC considers hedge funds inappropriate for ordinary folk is the scarcity of information about them. The increased transparency provided by sites like HedgeWorld might prompt the government to relax net-worth restrictions, which could bring about a paradigm shift in personal finance: a world in which market conditions don't necessarily affect the value of your portfolio.
- Jonathan Hoenig (jonhoenig@aol.com)
HedgeWorld.com: www.hedgeworld.com.
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