Investments in hedge funds of the world and Russia. What is a hedge fund: in simple words The largest hedge funds in the world

The average track record of the funds included in the rating was 8.29 years - a significant indicator for the Russian industry: many funds with a long history not only continue to exist, but also find strategies that allow them to remain effective and bring stable profits.

Of the funds that provided the data, 11 show negative historical returns, with track record lengths ranging from a year to 11 years. These same companies have a negative historical Sharpe ratio.

The leader of the rating, the Equinox Russian Opp Fund, earned an impressive 40.07% in 2015. At the same time, the Sharpe ratio remains average - 1.73 (with a maximum of 4.92 and a minimum of -1.81), as well as volatility - 23.12% (while the fund with the highest volatility has this indicator of 50.81 %, with the lowest - 3.30%). At the same time, in a historical perspective, one of the oldest funds in the ranking (with a track record of 19 years) Equinox Russian Opp Fund ranks seventh with a yield of 14%.

At the same time, the leader of this year's rating has the second highest indicator of historical volatility - 23.12%. The fund that outperformed it on this criterion, the Diamond Age Atlas Fund, with a volatility of 50.81% and with a significantly lower track record (3.5) was also the fund with the lowest historical return: -11.31%.

Flag Quantitative has the highest Sharpe ratio of 4.92. The fund ranks fifth with a yield of 19.34%. The same fund has the highest historical Sharpe ratio of 5.42, but the track record is only a year and a half.

The lowest volatility of the Tft Partners Investment Fund (ranks 11th) is 3.30%. This is lower than that of the Western benchmark of the rating - Barclay's Hedge Fund Index, whose average volatility in 2015 is 5.03%.

The list of funds included in this year's rating is incomplete: it represents slightly more than half of the real volume of the Russian industry. Many funds either do not publish data in Bloomberg, or publish, but not completely - such funds were not included in the rating.

Methodology

In the study, a Russian hedge fund refers to a fund with a Russian manager or headquarters in Russia. The list includes companies that provided data on profitability for 12 months of 2015. Rating parameters: profit based on the results of 2015, the Sharpe ratio (an indicator that demonstrates the effectiveness of an investment strategy through the volatility of returns) and, in fact, the volatility of the portfolio. The rating also reflects the historical performance and volatility of the funds.

Vladimir Potapov

Chairman of the Board of Directors of VTB Capital Asset Management

What events on the market since the beginning of the year could have affected the growth or decline in the profitability of funds?

In early 2015, the Russian corporate debt market was heavily oversold. In this regard, we have seen many opportunities to extract attractive returns with moderate risks. During the year, the appetite for Russian risk returned. Investors realized that most Russian issuers can service their debts without any problems. Moreover, a number of issuers took advantage of this opportunity to buy back their debt at a discount to par. In the absence of new placements, the prices of Russian bonds recovered quite quickly, and in some cases we even observed a shortage of securities on the market.

In extracting profitability through the adoption and management of risk in three dimensions: credit, currency and interest rate risk. We are constantly working on improving the investment process, analyzing our results and success stories.

We managed to avoid large positions in distressed names, which is the result of not just luck, but painstaking daily work. A significant positive contribution to the result of 2015 was made by positions in the securities of the financial sector.

Do you feel an influx of new customers today?

Yes, interest in Russian debt denominated in foreign currency remains both on the part of wealthy private clients and on the part of foreign institutional investors. Interest rates are going deeper and deeper negative around the world, the pursuit of yield continues.

How are you planning to end this year? What are you betting on?

The Russian bond market has already become quite expensive. At the same time, ruble bonds as a whole now look more interesting than currency bonds. In addition, you need to remember about the risk of starting a reversal upward in interest rates in the world. At the moment, the duration of the fund is approximately in line with the benchmark, and we do not consider issuers with low credit quality for investment. There is also a certain amount of cash in the portfolio, a kind of option to take advantage of the opportunities that may appear in the market when volatility increases.

Dmitry Belousov

Managing Partner of Kvadrat Black Fund SP

In 2015, Petr Popov, a partner and fund manager at GRW Asset Management, who became the leader of the rating at the time, said that soon there would be funds on the market that would consistently generate double-digit returns. How close are we to this goal?

Such funds have been around for a long time, earning two- and three-digit returns consistently, but this does not mean that investors can count on this return. In any case, trading strategies that bring huge interest will remain outside of public funds or in funds with high success fees. And the investor will get the average market percentage, adjusted for authority, brand, track record and other marketing indicators of the fund. All this is due to the inverse proportionality of the capacity and profitability of strategies. Perhaps Petr Popov relied on the fact that there are many promising teams in the Russian Federation that seek to "pack" their activities into the structure of a hedge fund. If so, then we will agree that there are more funds. But for now, they can be called start-up funds. They may well show double-digit returns.

What was your strategy?

In search of teams of algorithmic traders and providing them with part of the fund's capital for management. This strategy is inherited from the prop trading firm United Traders, whose traders manage the fund. The strategies that manage the fund's assets at the moment are constantly adapting to the context. This is already part of the strategies themselves.

What big mistakes have you managed to avoid and what do you consider your investment success?

We trade algorithms. They don't make mistakes and don't know what luck is.

What do you think is the advantage of Kvadrat?

Most funds are one team of traders with one trading strategy. They can afford to do research and implement new strategies at a later stage of development, when there is already a core that brings stable profits. We also have United Traders, a powerful incubator for selecting people to manage the fund's assets.

How are you planning to end this year? What will you bet on?

At the festive table, next to the Christmas tree. We will bet on a good mood.

Mikhail Boboshko

Member of the Board of Directors, Chairman of the NAURAN Hedge Fund Committee

What can you say about Russian hedge funds, looking at this rating?

The 24 funds that made it into the rankings are about half of the total number of funds in our small universe. The arithmetic average result is not bad: 6% (in 2014 it was almost -20%). It could have been better, but today in Russia there are not many investors who choose hedge funds, while very few of our funds are chasing Western investment money. It is curious that the top three included funds with completely different strategies. The Equinox Russian Opportunities Fund is focused on Russian stocks and works only in length, without hedging, so the volatility is very high: in fact, it reflects the RTS index and tries to beat it. VTB Capital Russia & CIS Fixed-Income Fund invests in bonds of the Russian Federation and the CIS, and the high yield for the year is surprising (historically, the results are more modest): perhaps the result was obtained due to devaluation or leverage. Kvadrat Black Fund has an algorithmic strategy, less fundamental, and the result is also good.

How much foreign money do you estimate is entrusted to Russian hedge fund managers?

The number of Western investors is small (20-25% - Western), while in terms of total investment they dominate (80-90% - Western money). Oddly enough, lately we have begun to notice interest from some of the major Western allocators.

How soon will we see a robot forming new strategies on its own?

The robo-advisory industry is increasingly chosen by investors who are tired of trusting managers and paying them big money for dubious results. It can be assumed that money will gradually flow there, as it is now flowing into ETFs: we have already given birth to an entire industry that works without brains. But at the same time, very liquid (for example, UCITS ) and successful hedge funds can remain investment objects for the robo-advisory industry.

Over the past month, I have studied hedge funds the most. I read a lot of articles about hedge funds, but I did not read a single book, because I did not find the very book about hedge funds that describes in detail the process of creating and managing in Russian (if anyone knows, write). When you start to study this whole huge world, it seems that hedge funds are something unattainable, that only some brilliant financiers and people who have been working on Wall Street for 10 years can create and manage hedge funds. However, going deeper and deeper, you realize that all this is a myth created by Wall Street itself. Of course, creating a hedge fund and managing it competently is not easy and even difficult, but it is not unbelievable. I compare starting a hedge fund to starting a business. After all, a business also needs to be created and this business must also be competently managed. Just like in business, the manager must have some kind of strategy, idea, plan according to which he must create and manage the fund. In this article, I will try to cover the process of setting up a hedge fund in as much detail as I can.

Imagine that you recently graduated from the institute as a financier, worked for five years in an investment company, simultaneously trading on the stock exchange, accumulated a certain amount (say $ 100,000) and decided that you need to open your own fund. You have made an investment plan and strategy and started to study hedge funds. You realized that it is much more difficult to create a hedge fund and find investors in Russia than, for example, in the USA. You decide to go to New York. You spend $500 on a visa and tickets, get a business visa and leave for New York. On average, you spend about $1,000 a week there. For a year it will cost about $40,000. You have about $60,000 left to set up the fund. In a week, you are fully settled and now you are ready to start. You start small, but no less important. You come up with a name for your foundation so you can formally complete the paperwork. You are also looking for a registrar to help you. You find a large consulting company with experience in registering funds in various territorial jurisdictions. On average, the payment for agency services for registering a fund is $1,150, since we are cooperating with a large company, then let the payment be $2,000. Payment of fees and charges for registration - $ 350-500, and licensing of the fund - $ 1000. You, together with your registry, come to the conclusion that the Cayman Islands will be your offshore country, since this is the most popular place for registering funds, the country is quite reliable, there is rich experience in this area, many procedures are simplified and taxation is low. Next, you need to register a management company. There are 2 ways here: either register your own management company (it is possible to take an individual professional trader as a manager), or hire one. In the first case, it will cost you about $ 10-15 thousand one-time. In the second, you will pay a predetermined percentage of the profits of your fund (usually from 20 to 30%) constantly. But since you have drawn up an investment strategy and plan and you yourself are interested in managing the fund, you choose the 1st method and create a limited liability company. Your next step is to find a custodian (guarantor) bank. It is better to involve a large bank. You also pass exams in finance and receive the necessary paperwork to authorize investor money management. You have received all the necessary documents, registered the fund. Now you need to find investors. You hire specialists with social activities, marketers (let's count minus $ 5,000). They find 10 investors (necessarily accredited), you meet with them and let's say you convince 7 of them to invest in your fund. And your capital is a small amount for hedge funds of $100 million. You rent an office on Wall Street, pay for the office yourself for the first month (minus $20,000) and look for staff. You need a quality lawyer and administrator who is required to determine the net asset value on a certain date (the larger the fund, the more often this happens: daily, weekly or monthly). An independent auditor will be elected by the board of directors. You also find some good traders, investment advisors and analysts. You choose a reliable broker with all the necessary licenses, open brokerage accounts (package of documents and assurance services) - $3,000. You also pay additional packages of documents for the fund with an apostille - $ 5800. As a result, your fund is ready and you start earning millions or even billions of dollars. If you do all the math, $60,000 is enough to start a hedge fund and you don't have to be a millionaire.

I have tried to describe in detail the process of setting up a hedge fund. Some information was taken from articles. If I wrote something wrong (I can be wrong too) or you do not agree, then write in the comments and we will try to fix everything. More information you will find here

A peculiar shadow of a wide variety of conjectures and theories has been trailing behind every organization called a hedge fund for several decades. Unfortunately, there is still nothing surprising in this, and the true essence and specifics of the work remain a kind of dark horse even for seasoned economists. In many ways, this is provided by the term "hedge" in the title - in the environment of financial management, this, in general terms, means providing coverage for financial risks.

Of course, the delusion of clients about such organizations, which many somehow perceived solely as insurance against various problematic situations in the field of finance, were generously flavored with numerous positive reports from the funds themselves about the success of their activities. However, in reality, this financial mechanism does not work as expected, and this is clearly something that every investor interested in profit should know.

The essence and purpose of the organization

Hedge funds are a private investment partnership, the purpose of which is to maximize the return on the funds invested by investors for given risks, or to reduce risks for a given return (this is what the term "hedge" in the name explains - from the English. protection, insurance). The very essence of such funds lies in one simple idea of ​​obtaining a constant profit based on the investments of depositors, regardless of the current situation in the market: whether it is either an unprecedented decline or a tangible growth. For such tasks, complex tasks are often used, which also include leverage, buying shares long or selling short, and many others.

The whole range of various financial operations that the fund can undertake is extremely wide. And only risk management in the market is, rather, the prerogative of only certain hedging organizations, for the most part this aspect is only one of the possible tools for working with finance, but by no means the only function.

Most of the funds of depositors are invested by managers in publicly traded securities, however, in essence, they are able to invest in literally everything that, in their opinion and strategy, can bring profit in the future: land, real estate, commodity market, currency, etc. The only restriction in this regard is prescribed directly in the investment declaration of the fund.

At the same time, such wide investment opportunities in practice are not available to everyone who wants to increase their fortune: access to the hedge fund is open to either "accredited" or professional investors, whose net worth must exceed at least $1 million (excluding the cost of their main housing). This limitation exists in view of the fact that professional investors are already sufficiently prepared for the difficulties and risks that a hedge fund's broad investment declaration implies. The limit on the number of investor participants is determined by the US Securities and Exchange Commission and is a maximum of 99 people, of which at least 65 must be, as mentioned at the beginning, "accredited" (an investor whose net income, according to US law, must be at least $200,000). Given the wide range of possible actions of the fund, the risks can be extremely high, which at the legislative level obliges investors to invest in such a way that their complete loss does not entail any damage to the family budget.

The birth of the revolution and its indelible mark on the world economy

Unique for its time and generation, the profit-making strategy was invented by American economist Alfred Winslow Johnson, who founded the first hedge fund in history in 1949. The authorship in the name of the hedged fund, likewise, belongs to him. He published the results of his work only six years later, in 1965, which made a lot of noise and interest in the market. In it, he described in detail the entire strategic mechanism for making money in a falling and rising market through the use of combinations of selling overvalued and buying undervalued stocks.

The former are securities whose current value is high, but there are some signs - harbingers that their price will collapse in the future. Undervalued - exactly the opposite, when the value of shares is low, but they have some prerequisites and potential for growth.

Using the strategy described above in general terms, Jones achieved impressive results - the value of his investments over the ten years of the fund's existence reached 670%.

The successful strategy gained enormous distribution, and by 1968 in the United States, the Securities and Exchange Commission had registered about 140 investment partnership associations that fell under the definition of "hedge fund".

However, the financial idea, revolutionary for its time, turned into a real financial disaster closer to 2008-2009, referred to in wide circles as the “great recession”. Generated largely by numerous and increasingly complex financial speculations, the global crisis of those years received a lot of influence from the hedge funds themselves, and hedge funds are, at their core, speculative organizations. However, for the sake of objectivity, it is worth noting that the first bursting bubble of this financial storm was precisely the housing one. Outstanding mortgage loans, which were issued on an astronomical scale at that time literally for everyone (in a considerable amount and for those whose solvency could not close the issued debt obligations at all), dragged the entire financial and credit sector to the bottom, after which the crisis in full least spread to the real economy of the United States and countries of other continents.

By shorting bank stocks, investment hedge funds only exacerbated the growing financial panic, significantly catalyzing the global economic collapse. And although part of the guilt of these organizations for everything that happened at that time is undeniable, but still not only they influenced those events. The greed of the consumers themselves, which is in no way inferior to the thirst for profit on the part of economists, attracted to the mass appearance of huge credit debts, which in general were absolutely disproportionate to their ability to pay.

Today, the world has recovered from the severe consequences of the crisis, and the control over the activities of hedge funds has been significantly updated after a barely repairable blow to their image as financial institutions. In total, the global market has about 12,000 hedge funds, whose managing assets amount to trillions of US dollars. However, due to the complex and in most cases extremely confusing legal structure of these organizations, it is extremely difficult to calculate more accurate amounts of assets of specific funds.

Structural components of a single mechanism

Hedge funds are, in most cases, partnerships that are unique in their organization with many features and nuances. Some are incredibly complex and confusing, while others get by with the simplest and most transparent structure - it all depends solely on the goals, strategies and methods of the fund. However, almost any hedge fund structure consists of the following key links:

• Investors- exactly those people, without whose assets the existence and activity of the fund itself is impossible. The organization offers its services to investors, who, if they agree, invest some part of their capital. After that, as a result of its correct use, on this basis profit is obtained in the market, both for the client and for the fund.
• Guarantor bank, or custodian is a bank whose main task is to ensure the safe storage of investors' assets, whether it be currency, securities, precious metals, etc. this is a task for prime broker). In addition, the custodian also prepares reports on transactions made through the fund account; checking the compliance of the real policy of the manager with the list of goals stated in the charter of the fund. Of course, this role is usually played by a large bank with a solid positive reputation.
• Manager- a person or, as a rule, a company that determines the entire investment strategy, while being responsible for each of the decisions made by the fund. In addition, the hedge fund manager also oversees all operations.
• Board of Directors- monitors the activities of the manager, as well as the companies providing services to the fund. The Council is authorized to resolve disputes and conflicts between shareholders and managers, to appoint personnel to key positions of the fund. It is the members of the council who are personally responsible (up to criminal liability) for the fund's compliance with all the principles and rules prescribed in the memorandum.
• Administrator- determines the net asset value of the fund, regardless of the manager, which gives a significant reduction in risks in the event of a valuation error of the latter. However, most administrators assume the functions of accounting, paying bills, notifying shareholders with activity reports, distributing profits among shareholders, and subscribing to and redeeming shares / shares of the fund.
• Primary Broker- this role is usually played by a large investment bank, which does not perform one-time transactions on behalf of the hedge fund as an ordinary broker. The Primary Broker provides the Fund with a range of professional services related to clearing (cashless settlement between enterprises/companies/countries through goods/securities/services), custody services and operational support.
• Auditor- a person who checks the compliance of financial statements with accounting standards and financial legislation. The manager usually conducts an audit annually, but even such rare audits do not detract from this position in the structure of the organization - without an auditor, other service companies or third-party agents are unlikely to agree to service the fund.
• Legal advisor- is necessary to ensure the fund's licensed status, which is issued by authorized regulators subject to a number of specific requirements. The license opens up a much wider scope for opportunities and recruiting an investor base, but, in addition, a consultant is often used to conclude various contracts and agreements.

This is exactly what the structure of a hedge fund looks like. Again, in various cases, this scheme in practice can be even more simplified (even with the absence of any of the above frames) or much more tortuous and complex.

"Typical fund": varieties and classifications based on the ongoing investment strategy

In addition, despite the structural component, the International Monetary Fund distinguishes three types of hedge funds:

1. Global Funds- Their activity extends to the entire world market. However, this type of fund usually develops its strategy on the basis of analysis and forecasts of the dynamics of shares of individual companies.
2. Macro funds- work exclusively within the framework of a specific national market. Usually based on the macroeconomic and financial characteristics of a particular country.
3. Relative value funds- the original classic type of hedge funds, as they were at the very start of their existence. They carry out financial transactions within the stock market of any one country, using the good old strategy of selling overvalued and buying unvalued shares. At the same time, the manager constantly monitors the current situation on the market in order to choose the most appropriate moment for the transaction and get the maximum profit.

Of course, the variety of hedge funds on the world market does not end with the official classification, because there is little that prevents managers from creating many additional subspecies and branches, if necessary.

Learn more about hedge fund working hours

The partnership policy of the vast majority of hedge funds is aimed at long-term membership of investors, so that their deposits remain at the disposal of the fund for a long time. This mainly concerns the exit rules: the contributor needs to warn the organization about such a decision in advance, while the interval between notification and termination of membership can reach up to 2-3 months (depending on the established regulation). Another alternative often encountered in practice is the immediate withdrawal of the entire deposit in cash, however, the prices for the purchase / sale of assets are determined directly by the fund itself. And, of course, in most of these cases, the difference between them reaches very significant indicators.

So, upon entry, exit, or with a partial decrease in its contribution, the entire volume of investments of each partner is reviewed and, accordingly, the share ratio also changes. The termination of membership of a certain number of investors can significantly increase the total amount of profit among the remaining ones: management can pay off departing investors with far from the most successful investments, leaving more promising assets in their portfolio. Thus, after some time, the hedge fund can experience a sharp increase in return on capital due to the contribution that previously participated in the creation of income and was subsequently withdrawn to the exiting investors, but who had not yet had time to receive the percentage of benefits due. However, if in the hedge fund environment there is a persistent trend towards the active exit of investors, then no one is immune from a completely opposite effect in the form of a mass panic exit of partners. Often this is fraught not only with a drop in the return on capital, but also with the complete bankruptcy of the entire organization.

More controversial than the broad area of ​​investing in finance is the expanded commission system. Hedge funds receive not only a single operating cost ratio, but 2% for the management of the assets themselves and 20% of any profits made. At the same time, even if the manager suffers losses and does not bring any income at all, according to the memorandum of association, in any case, he is entitled to these 2% of the total volume of controlled assets (such a system was appropriately called "2 and 20"). A similar commission system is practiced by the vast majority of hedge funds on the planet. However, many analysts today especially emphasize the trend of the gradual transition of funds to the "1 and 10" system. In the case when the manager does not charge charges at all simply from the disposal of assets, this is covered by a higher percentage of commissions from the profits received.

In pursuit of big profits: modern strategies for working with investments

Extremely diverse investment opportunities and areas, as well as the influence of many different factors, constantly contribute to the generation and implementation of new earning technologies for hedge funds. However, despite this, the modern basic strategies for working in the financial field can be quite classified into several general types:

• Long/short position (Long/short position)- usually hedge funds with this strategy work with 40% of their assets. It consists in the acquisition of undervalued assets (long) and the sale of overvalued assets (short).
• Market-Neutral Arbitrage- works only when the same assets diverge in value on different exchanges. The manager enters a long position on overvalued assets on one exchange and a short position on another - where the same assets are overvalued.
• Reaction to events (Event Driven)- the strategy is based on the unfair value of the shares of any enterprises that have undergone certain changes (whether it be a merger, acquisition, reorganization, etc.). The manager catches a favorable moment for the operation (purchase / sale) before the market equalizes these unfair prices.
• Short positions (Short Bias)- with this strategy, the fund mainly holds short positions, earning on falling markets.
• Real value (Value)- investing is carried out in securities that are sold at a discount to the main assets or undervalued by the market.
• Crisis Securities (Distressed Securities)- purchase at a deep discount of shares and liabilities of companies that are on the verge of bankruptcy or restructuring. Investing according to this strategy assumes that as a result of internal changes, the selected companies will become more powerful, bringing profit along with it.

Often, funds resort to mixed strategies, using several of the above working methods at once to make a profit.

Regulation: what are the rules of the game and leverage for hedge funds?

For a long time, hedge funds stood apart in the global market due to their closeness and weak regulation of financial transactions. However, of course, there could never be any talk of complete anarchy and freedom of action - the normative regulation of funds was, is and will always be. Today, given their rapidly growing influence on the world market and the increasing frequency of various violations and insider trading, special commissions and bodies monitor and control them more carefully than ever before.

In particular, the JOBS Act (Jumpstart Our Business Startups Act), introduced in March 2012, after some time made quite significant changes in the work of hedge funds. Designed as a measure to encourage funding by various small business institutions, the act weakened the control of the securities market. Thanks to the new law, hedge funds, given their wide investment opportunities, have become almost the main providers of capital for start-ups and small businesses. This act subsequently had a major impact in September 2013 in lifting the ban on advertising for hedge funds and firms offering individual placements.

In many countries, hedge funds are required to report to government financial authorities at the first request for large positions in foreign exchange contracts, as well as to disclose their positions in newly issued or upcoming securities. Such measures are introduced specifically to limit money laundering and strengthen capital controls so that large players do not infringe on the interests of small players in the market.

In addition, the policy of state control of hedge funds is also aimed at reducing the systematic risks of destabilizing the financial system as a whole. This is reflected in the regulation of margin requirements, collateral and limits set by financial intermediaries for individual clients.

In order to mitigate risk with hedge fund lending, major prime brokers and banks re-evaluate their positions against market-priced positions of the funds they lend to on a daily basis. These loans must be secured by appropriate collateral in the form of valuable assets. In addition, banks have the right to set lending limits for each fund separately, based on their own monitoring of the investment strategy, monthly income, cases of investor withdrawal and the history of business relationships.

The Most Successful Hedge Funds in the World Today

Meanwhile, not the best times for hedge funds continue to drag on from last year. Overall earnings have been below the average recorded over the past few years: the biggest hedge funds made $517.6 million last year, what? according to some experts? better than the results of 2014, but as much as 40% worse than the profit received in 2013.

At the same time, the price of all assets involved in one way or another in the activities of hedge funds increased by about $51.7 billion, reaching a total estimated value of $2.97 trillion.

The negative downward trend in profits is clearly reflected not only in the tangible financial losses suffered by even the best hedge funds in the world, but also in the obvious changes in the ratings of the strongest market participants. Such well-known figures as John Paulson of Paulson and Co., Leon Cooperman of Omega Advisors, and Daniel Loeb of Third Point lost their positions. In their former places, such players as Ken Griffin from Citadel and James Simons from Renaissance Technologies firmly established themselves. Both managed to earn a record $1.7 billion in 2015, thus quite deservedly ascending the podium of the strongest hedge fund managers.

The rating of hedge funds can change beyond recognition, ruthlessly throwing seemingly time-tested and market leaders to the bottom. Whether the current top players will remain at their positions without suffering significant losses by the end of the year - only time will tell. In the meantime, the leadership among all hedge funds on the planet is held by these ten managers:

Hedge funds in Russia: ratings, prospects and emerging trends

Not the most profitable times for hedge funds also affected the Russian counterparts of American traders. Demonstrating a negative return, the situation with domestic funds in general looks less colorful than in the Western market, where such institutions are considered one of the most reliable financial instruments, consistently bringing up to 20% return on investment with minimal risks in most cases.

In mainly represented by mutual funds (Unit investment fund) and OFBU (general funds of banking management). Especially hedge funds in Moscow quite often have the status of trust management. The total number of domestic hedge funds now stands at about six dozen. A similar figure was recorded in the mid-eighties in the United States, where the market at that time already really appreciated hedge funds. In Russia, the legislative framework significantly limits the tools for the activities of funds, preventing the use of a vast number of strategies for working in the market. For the same reason, a huge part of Russian investment partnerships are registered in offshore zones.

Therefore, the adoption of a number of changes in the legislation on this issue can significantly stimulate Russian hedge funds and their economic growth, allowing them to adopt a much wider choice of strategies.

And although hedge funds are not as widespread in Russia as in the West, we still have impressive examples of leaders who can compete with competitors at the international level. The most successful of them was VR Global Offshore Fund, whose profit for the year amounted to 32.32%. But VR Global Offshore Fund managed to achieve such a record yield for the domestic market by blocking funds: the fund has the highest percentage of a penalty for investors for early exit - 4.5%. Diamond Age Atlas Fund earned less - 22.92% of the total profit, leaving Copperstone Alpha Fund in third place in the rating. The bronze medalist managed to grow by 22.06% over the year.

Finally, in fourth place is Burnem Asset Management, whose income for the past year amounted to 17.63%.

In the hands of all four of the above funds, approximately 80% (3.425 billion dollars) of all assets are concentrated compared to other competitors in the Russian market. At the same time, more than half of these funds - 1.634 billion - belong to the VR Global Offshore Fund.

Personal experience with hedge funds in the reviews of the market players themselves

Today, hedge funds are one of the most profitable and at the same time the most stable investment partnerships among many other investment alternatives in the modern market. Large professional entrepreneurs and businessmen in search of profit, as a rule, always mark the hedge fund as the highest priority financial institution to which they entrust their hard-earned money. The reviews are negative, the reviews are positive - hardly anyone now trusts the opinion of strangers - "depositors" on the Web, when fake accounts have become almost one of the main tools of commerce.

Another thing is that there have always been risks, there are now and will be in the future, especially in the economy. Thus, not every hedge fund can actually be an investment partnership, but rather creates a fake around its name for the one and only illegal purpose - fraud.

One of the most high-profile cases was the scam that cost Madoff Investment Securities investors about $50 billion. His investment fund, which cost several million US dollars to enter, was known to many people from high society. Madoff himself was also known for his generous philanthropic donations to cancer and diabetes research, US Democratic Party campaigning, and cultural and educational institutions.

However, this did not save the fund from the inevitable restructuring after the 1995 crisis from an investment partnership to a financial pyramid. However, the bubble he created burst at the end of 2008, after which Madoff was sentenced to 150 years in prison.

Truly experienced players (people who have already earned more than the first million by investing funds) first of all recommend taking a closer look at the minimum amount for entry. If it is equal to or even less than $50,000, then be sure for sure - you are faced with a hype disguised as a hedge fund. For example, foreign hedge funds tested by time and dozens of clients accept investments of at least $100,000.

The word “hedge” that has become familiar means minimization. After learning about this, a novice investor may think that investing in hedge funds is less risky than other types of investment. Let's see how safe the hedging strategy is and whether it can protect capital.

What is hedging and how is it applied?

I have been blogging for over 6 years now. During this time, I regularly publish reports on the results of my investments. Now the public investment portfolio is more than 1,000,000 rubles.

Especially for readers, I developed the Lazy Investor Course, in which I showed you step by step how to put your personal finances in order and effectively invest your savings in dozens of assets. I recommend that every reader go through at least the first week of training (it's free).

The concept of "Hedge" is translated from English as a fence, obstacle or barrier. Based on this, hedge funds are created to counteract the losses of investors. In one of the articles I already wrote about. It is actively used by banks that open positions to buy a rising currency against a falling one. As a result, they not only protect their balance sheet from losses, but also make a profit.

There are two main types of hedging:

• through the purchaselong), for the purpose of insurance against price increases in the future;
• through sale (short), the goal is insurance against price reduction.

Hedging is a combination of long and short positions in a certain proportion through the purchase of undervalued and the sale of overvalued assets. For example, the acquisition of rising stocks while opening short positions on the shares of companies that, according to forecasts, should go down. If the calculations are correct, this allows you to protect the profit received from the purchase of rising stocks.

It is the case when the manager does not care in which direction the market is moving. As a rule, not physical goods are bought and sold, but derivatives market instruments or currency. The entire value of the transaction is not necessarily hedged. With any risks, the price of the delivered goods, the exchange rate or will not fall to zero. Therefore, partial hedging of the contract is often used.

Any transaction is not free, because the assets are borrowed from the broker. However, even taking into account the remuneration of the intermediary, this can bring benefits. For example, sold short and depreciated securities are then bought back at a profit. By opening a long position, the hedger keeps growing assets and sells them after they rise in price. Minus the commission to the broker, he makes a profit. Thus, the hedger earns in both rising and falling markets. provided by the broker is used as leverage to increase profitability.

You can hedge using various tools:

1. Transactions in the opposite direction from an already open position. For example, a simultaneous game in the markets of two countries with a difference in the rate.
2. Converting a deposit into a currency for which growth is planned. Example: transferring assets from the ruble to the dollar can be an excellent way to hedge currency risks. It was profitable in 2014 or in the first quarter of 2018, on the eve of the imposition of sanctions. But in 2016-2017, this would have brought a loss multiplied by leverage.
3. hedging, when a contract for the purchase of a stock asset or currency is concluded with a delay in execution. Thus, the seller and the buyer agree that the goods will be delivered in the future at today's cost. Also similar in terms of mechanisms are forward contracts, margin CFD contracts for price difference.

The terms of the contract may also be different:

1. Direct execution of the contract in the future at an agreed price.
2. Inclusion in the contract of insurance conditions, for example, on the division between the parties of both profits and possible losses;
3. Interest hedging, when the currency is exchanged at the current rate and placed on the bank account. This is used when money is needed in a few months, and the rate may move in a direction that is unfavorable for you.

How hedge funds work and what they are for

Wikipedia's definition states that it is "an investment fund focused on maximizing return for a given risk or minimizing risk for a given return." To understand how this tool works, let's dig a little deeper.

Hedging operations were known long before the advent of specialized funds. The Chicago Stock Exchange used commodity futures as early as the 19th century. The history of hedge funds themselves began in the late 40s of the XX century in the United States. The first fund was created by Alfred Jones. Although he was an amateur investor, he successfully shorted the shares of companies on a downtrend. By the 1960s, hedge funds numbered in the dozens, gaining investor acceptance. The peak of popularity of such strategies came in the 80s, when the amounts in management reached several trillion dollars. The world's largest concentration of hedge funds is in the City of London (more than a third).

A classic example of a hedge fund is Quantum, led by George Soros. The latter became famous for making a billion-dollar short British pound in 1992. He is also known for investing in the Russian economy, where the losses from the 1998 crisis amounted to an amount comparable to the gain on the pound. For a better idea of ​​what a hedge fund is, watch the movie "" ("The Big Short"), based on the book by Michael Lewis.

The main elements of the structure of a hedge fund:

• Asset Manager - MC, which determines the strategy and operational support;
• Custodian (usually a guarantor bank for transactions);
• Independent auditor - establishes the value of assets and maintains accounting;
• LegalAdviser - provides legal support.
• Prime broker (usually an investment bank) - makes transactions on behalf of the fund, lends assets and.

One of the features of hedge funds is low regulatory requirements. Managers are relatively free in their choice of instruments. Professionals managing investors' assets use a wide range of strategies. These include leverage and complex derivatives. This explains the fact that access for non-professional investors (nonqualified investors) is very limited, and in most cases it is completely closed. As a rule, an investor cannot invest less than a million dollars (in Europe from $100 thousand), and the number of participants should not exceed 100.

The result of hedging can be not only containment of the risks of losses, but also the limitation of possible profit. After all, if you guessed the price movement, then opening a deal in the opposite direction will put on this right course. Why are such operations carried out? The answer is obvious: funds deal with clients' money and use a lot of leverage. Under these conditions, investors' funds need insurance, and the fund receives its profit in the form of a management fee.

Is the game worth the candle

In 2008, Warren Buffett made a $1 million bet with Protégé Partners, a portfolio manager of 5 hedge funds. Its founder J. Terrant and head T. Sides admitted defeat in 2018 and gave all the lost money to charity. grew by 80% over 10 years, and active management funds - by 22%. True, it is worth noting that the market at that time grew phenomenally after, and hedge funds outperform the index in a falling market. If Buffett lives to see the next global crisis and makes another bet, he will most likely lose.

Among the funds there are stars in terms of profitability, but they are rather an exception:

By itself, hedging does not aim to extract super profits. The main task is to protect the price of a product or the exchange rate from. The average net return of hedge funds over the past 20 years has been around 4-6% per annum. For comparison, they can give from 6 to 12%. Consider also the restrictions on private investors that exist in hedge funds. Yes, and the management fee in ETF is significantly lower. So, index ETFs take an average of 0.36% for management, and the Vanguard Equity Income fund - 0.26%. Hedge funds typically charge around 2% plus 15-20% on asset gains.

Advantages of hedge funds:

• can earn not only in a growing, but also in a falling market;
• a wide range of investment instruments: stocks, bonds, currencies, futures, options, etc.;
• freedom of managers in choosing a strategy, which potentially increases profitability;
• are able to mitigate the consequences of crises and by reducing the drawdown compared to the index.

Flaws:

• relatively high trading risks, including those associated with the use of leverage;
• inaccessibility for unqualified investors;
• high entry threshold;
• at the stage of a growing market, on average, they lose to indices in profitability;
• negative plume from resonant financial pyramids;
• you can enter only at the stage of formation;
• it is permissible to sell its share only within the fund.

Given the role of hedge funds in the global crisis of 2008, today they have lost their former function. Of particular resonance was the story of the Madoff Foundation, who received 150 years in prison in 2010 for organizing a financial pyramid. The best results come from "single-manager funds" like Buffett and Soros, who are already in advanced age. However, at least 10,000 funds around the world still find their clients. Today the so-called time expires. unregulated funds: the degree of transparency and control by regulators is increasing. Investments in a modern hedge fund are most often made through a bank account. At the same time, non-trading risks are reduced, since the account is owned and controlled by the investor.

The share of hedge funds in the global investment market is about 10%. The outflow of funds from them is about $100 billion a year, and the share is gradually decreasing. Within the funds, the share of funds of institutional investors (banks, etc.) in 2007 exceeded the share of individuals. This is a market of large players, and its consolidation continues.

There are two misconceptions among investors:

1. Hedge funds are designed to relieve their participants of risks. The truth is that even with such a wide range of speculative instruments, investment risks cannot be completely removed. Hedge funds don't really have that task. The goal is to optimize the risk-reward ratio. In other words, this is not risk protection, but risk management.
2. At the other extreme, hedge funds carry an excessive risk of losing capital. Many of their strategies do use aggressive tools. However, this does not indicate the irresponsibility of managers who aim to receive commissions regardless of the profits of their clients. Most funds are focused not on maximum profitability, but on protecting participants' funds from market volatility and. In the end, the client can always choose a conservative fund or order a portfolio with a low level of risk.

In the portfolio of a wealthy investor (from $ 1 million), hedge funds can be present with a share of up to a third of the assets. It will be good in case of a global crisis. It is better to choose funds offered by large banks like UBS or Barclay. You can decide on the selection using specialized services, for example, europe-finance.ru, Barclay Hedge, Morning Star (the last 2 are in English) or with your broker. When choosing a fund, you should pay attention not only to profitability, but also to the duration of its history, which guarantor bank is behind the transactions and the reputation of the manager.

Hedge funds in Russia

The legal opportunity to open hedge funds in Russia appeared only in 2008. The first such fund was the "Private Investment Fund 05.09" from Alfa Capital (ceased to exist in 2012). The second unsuccessful attempt by the same broker was the “Corporate Investment Fund 09.10” (closed in 2014).

The closest "relatives" of hedge funds in Russia are OFBU (General Bank Management Funds). They consolidate assets (including foreign assets) under a trust management agreement in the form of cash, securities, and various derivatives. OFBUs are established by banks that have received special accreditation in. The investor receives a certificate of rights to participate in the fund's property. Management fees depend on the amount and term of the investment and can vary from 0.5 to 3%.

In addition, the manager receives a percentage of the increase in the share. The minimum investment amount in different funds is from 10 to 100 thousand rubles. You can view the current list of banking management funds, for example,. Since 2013, the registration of new FBUs has been discontinued. Relative freedom in choosing a strategy and vague guarantees for private shareholders played a role in this.

If you want to choose an affordable collective investment option for yourself, it is better to consider an alternative in the form of an ETF. The Russian version can be , which is a distant analogue of a hedge fund. Moreover, OFBU under Russian law is a kind of mutual funds. Unlike contributions to OFBU, a share of a classic mutual fund has the status of a security. While there are only a few funds with positive returns among OFBUs, mutual funds show relative stability. But the main difference is that unqualified investors can invest in ETFs and mutual funds.

A qualified investor is one who owns property (securities) in the amount of at least 6 million rubles. or has experience in an investment company, or makes transactions at least once a month (on average 10 times a quarter) and has a specialized education.

In Russia, the choice of analogues of hedge funds is extremely limited, and the funds themselves are not very popular. Information on them is mostly closed, statistics on monitoring services are not published. Therefore, domestic investors focus mainly on foreign markets. If you are a qualified investor and have an impressive amount, then in order to participate in a hedge fund, you will be forced to open an account with a foreign bank, which will buy fund units on your behalf. You can make a choice both independently and entrust this issue to the bank. A more attractive, accessible and widespread alternative is foreign ETFs.

Unfortunately, the choice of ETFs on the Russian market is limited. From the available probabilities, you can use:

• purchase shares of a mutual fund investing in ETFs;
• through a Russian broker (access to a foreign exchange - mainly through offshore);
• through foreign investment products;
• directly through a foreign broker operating in Russia (Saxo Bank,);
• on the Moscow Exchange, for example, through Finex Management Company.

You can learn more about the structure of hedge funds and the procedure for investing in them in a video from NES (Russian School of Economics)

All profit!

Hedge fund - what is it in simple words? A private investment fund that:

1. Controlled professionals for the benefit of investors.
2. Valid for aggressive investment strategies.
3. Not limited in choosing investment methods, actively uses derivative hedging instruments (derivatives) and their combinations.
4. Goal: focuses on minimizing risk at a level of return strictly set by investors or maximizing profit at a given level of risk.

Key principles:

1. The principle of protecting the interests of investors.
2. The principle of equity participation or trust management. The latter means that by investing in a hedge fund, you transfer your money to professional managers and become a beneficiary (beneficiary).
3. The principle of free and unlimited control. Based on minimal government regulation and oversight. For example, in the United States, even the Securities and Exchange Commission does not interfere in the work of the organization. On the one hand, the principle guarantees the maximum degree of freedom. And on the other hand, the investor must be able to independently protect his interests (for example, in the case of trader's machinations).

As a result, a hedge fund has the following features:

• greater flexibility and the ability to follow any investment strategy, including aggressive ones;
• a large selection of potentially profitable investment assets with limited availability for other investors: securities of foreign issuers, precious metals, exchange derivatives (futures, options);
• unlimited leverage;
• the possibility of using the most modern financial technologies (fintech, blockchain);
• limited participation rights and strict requirements for depositors - funds are intended only for professional investors.

Important! In international practice, such an investor must have the status of "qualified, accredited" and have substantial capital. For example, in the United States, the minimum investment for individual private investors is $5 million, for corporate investors - $25 million. Offshore structures are simpler - the entry threshold is from $100,000.

A qualified individual investor in Russia must meet one of the following requirements:

• owns cash, cash equivalents, securities and derivatives in the amount of RUB 6 million or more;
• has three years of experience in an organization that made transactions in the securities market;
• over the past year, conducted transactions for 6 million rubles, making at least 10 transactions quarterly;
• has a higher education in the field of activities in the securities market.

To finally decide on the specifics of hedge funds, let's consider their differences from classic mutual funds.

Important! The popularity of this method of investing abroad is due to the following fact: if a competent strategy is implemented, the hedge fund will bring profit to investors not only in a growing market, but also in a falling one.

Peace Foundations

The first ever hedge fund - A.W. Jones & Co. Year of registration: 1949. Founder: Alfred Jones.

He carried out long-term investments in shares of promising companies with a parallel opening of short positions for the sale of securities that did not live up to expectations. For 10 years, the value of investments has grown 7 times, which significantly exceeded the profitability of any traditional mutual fund. The experience was recognized as successful, and in 1968 there were already 140 organizations registered in the United States.

The global stock boom took place in the mid-1980s, when a new type of strategic funds arose, building their portfolio on the basis of the most accurate tools for predicting economic and political trends.

Interesting fact: The most famous for the general public is George Soros' Quantum fund, which rose on the devaluation of the pound sterling after the "Black Wednesday" of 1992 with a profit of $ 1 billion.

Today, more than 12,000 hedge funds with assets of more than $2 trillion have been founded in the world. Most of them are registered in the UK (London), the USA and offshore zones. Below is a list of the largest management companies.

A large portfolio is a relative guarantee of reliability and greater maneuverability. However, the size of assets and profitability, as a rule, are not interconnected. This is confirmed by the fact that young structures with a small portfolio often lead in the profitability rating. A key feature of hedge funds is the fact that their returns are volatile. Thus, the leaders of 2015 by this criterion have lost their positions today. Profitability of the best funds of the planet in 2016 analyzed in this article.

Kinds

The IMF classification distinguishes three types of structures:

1. Relative value funds- operating in a specific market segment using classical hedging strategies, relying on the duality of prices of the underlying asset in the spot and futures markets.
2. macro funds- prefer to invest in the assets of a particular country, based on the forecast of its political and economic development in general.
3. Global Funds- play in the markets of all countries based on the investment attractiveness of securities of specific issuers.

Operating procedure

How do hedge funds work? A typical structure of his environment is as follows.

Investors- source of funds.

Board of Directors- a link between investors and managers. Supervises the activities of the management company and companies providing services, resolves disputes, determines personnel policy.

Management company (UK)- attracts investors, determines investment strategies, provides general management. The UC includes:

• managing partners;
• analysts - the quality of predictive models for the development of the economic and political situation depends on them;
• traders are the "core" of the fund, the profitability of investors depends on the level of these people.

Administrator- conducts an independent assessment of the value of net assets (risk minimization), in some cases prepares accounting and external reporting for investors, pays bills, deals with issues of profit distribution, subscription and redemption of shares.

Primary Broker- provides operational support and technical support for transactions in the national and foreign markets. Provides a range of financial services (clearing, depository, etc.). It should provide the most complete coverage of the markets where the management company is present, therefore, a large bank (Merrill Lynch, Goldman Sachs, Morgan Stanley) often acts as a primary broker.

Guarantor bank- ensures the inviolability of deposits, generates reports on transactions on the account, in some cases checks the activities of the management company. In most cases, a large bank with an unshakable reputation.

External Auditor- checks the reporting for its reliability and compliance with accounting and legal norms. The auditor is the guarantor of reputation, which, given the volume of investments, is of paramount importance. Therefore, they try not to save on it and attract well-known companies from the TOP 10.

Legal advisor(internal or external) - ensures obtaining a license, manages all issues of concluding contracts in different jurisdictions.

The considered structure allows numerous variations in the direction of simplification or complication.

Strategies

Even a small hedge fund in the US brings its investors from 10-20% per annum (of course, in foreign currency). The profitability of top organizations exceeds 100%. How do hedge funds make money?

A variety of investment strategies, methods and methods of hedging can be conditionally combined into several groups.

Fair Value or long position- long-term investments in undervalued securities or securities at a discount. Recall from articles "Shares", what underestimated A share is considered a security if its estimated fair value exceeds its market value. This is the main strategy of any long-term portfolio and venture investors. Reliable assessment of fair value is not easy, so hedge funds need the services of professional appraisers.

Short position- a trader sells short positions, earning in a falling market.

Example 1. A trader borrows 1,000 shares of company A from a broker. Price: $100 Broker's commission: $1,000 Debt: $101,000 Trader sells securities in the market. A month later, the spot price dropped by 25% to $75. The fund buys shares, returns them to the broker, and makes a profit of $24,000.

Long/short position (Long/Short position)- the most popular hedging strategy, usually applied to half of the assets. It implies the acquisition of undervalued assets (long position), and the sale of overvalued ones (short position). The strategy can be diversified, but most often the fund uses it in relation to firms competing in the same industry.

Example 2. A trader buys 1,000 undervalued shares of automaker A at a price of $100 with his own funds. Brokerage fee: $1,000. To hedge risks, the trader opens a short position with a broker on 100 shares of automaker B under the same conditions. If the trader is not mistaken in the degree of undervaluation of shares of producer A, then:

• In a rising market, for example, Company A's shares will rise by 30%, Company B's by 20%. Profit on long position: 130 - 100 - 1 = $29k Loss on short position: 100 - 120 - 1 = $21k Total profit: 29 - 21 = $8k
• In a falling market, for example, company A shares will fall by 20%, company B by 30%. Loss on long position: 100 - 120 - 1 = $21,000 Profit on short position: 130 - 100 - 1 = $29,000 Total profit: 29 - 21 = $8,000

Thus, the strategy will allow you to earn both on the rise of the market and when it falls. A loss is possible only if the change in the price of shares of company B exceeds company A in absolute value, which signals the trader's incorrect assumptions.

Market Neutral Arbitrage- a trader earns on the difference in prices (spot and futures) of the underlying asset on different exchanges.

Reaction to events (Event Driven)- the trader promptly responds to short-term unfair changes in the price of shares of a particular issuer caused by significant events (acquisition, merger, reorganization, etc.). The essence of the strategy is to buy or sell securities in time before the price equalizes. The strategy brings the maximum effect if the managers have insider information or occupy senior positions in the investment object.

Crisis Assets (Distressed Securities)- acquisition at a large discount of assets and liabilities of a company on the verge of restructuring or bankruptcy. The essence of the strategy: the hope for the revival of the company as a result of internal changes and capital injections.

Global Macro- a hedging method that involves profiting from major macroeconomic and political changes in specific countries. Bonds, interest rates and currency pairs (currency risk hedging) are used as the underlying asset.

Funds in Russia

The Achilles' heel of the Russian market is its youth. The existence of investment funds at the legislative level was enshrined in 2008 by the “Regulations on Investment Funds”. Hedge funds in Russia are recognized as a separate category of mutual funds.

Opening a hedge fund in our country is problematic due to complex registration rules - according to the investfunds.ru website, only 24 organizations are officially registered.

Russian structures are characterized by features inherent in a young, undeveloped market:

• increased degree of closeness of large, well-known players;
• high proportion of scammers;
• lack of trust in managers;
• a pronounced shortage of investors.
• problems with covering operating costs and insufficient funding for research and market analysis;
• problems with qualified personnel, increased demand for good traders.

Among Russian organizations, the following can be distinguished:

• UK: Alfa Capital. "Private Investment Fund". Year of foundation: 2009. It is closed. Later, under the auspices of the same management company, the “Corporate Investment Fund” was created.
• UK: Europe Finance. Dominum Russia Global Fund. Year of foundation: 2009. DRG uses the popular western strategy of managed futures.
• Founder: FC Otkritie. Management Company Meriden IFM. Open strategic fund "Otkririe Hedge Fund". Registered in 2007 in Andorra. It is focused on working with Russian assets based on its own multi-strategies.
• Of particular interest are also organizations founded by PJSC Sberbank and VTB, as well as: VR Global Offshore Fund, Diamond Age Atlas Fund, Copperstone Alpha Fund, Burnem Asset Management.

In addition to "pure" hedge funds in Russia, one can single out their closest analogues in terms of their economic essence: trust managers and general banking management funds (OFBU).

The bank acts as the UK OFBU, the license is issued by the Central Bank of the Russian Federation. The property of the OFBU is completely separated from the property of the bank. Such an organization of activity provides a number of advantages:

1. Possibility of efficient use of banking infrastructure: depository, banking audit and financial control, branch network. This reduces the investor's commission costs.
2. Good reliability and transparency. A separate correspondent account for depositors with a bank of Russia and a separate foreign currency account with a bank specified by the Central Bank of the Russian Federation. In the event of a bank default, its depositors do not claim the property of the fund.

Participation procedure: the investor invests in exchange for a participation certificate, which is not a security, but gives the right to a part of the property. Unlike equity securities (shares), a certificate is not traded on the market, but can be bequeathed or simply re-registered to a third party (on the basis of an application to a bank).

Bank Requirements:

• term of "life" - not less than 1 year;
• the amount of capital - from 100 million rubles;
• condition rating - "financially stable";
• no more than 15% of the portfolio can be invested in the securities of one issuer (except for government securities).

Instead of a conclusion

Summing up the preliminary results, we will definitely focus on the shortcomings of hedge funds:

• limited entry opportunities - serious structures are closed;
• high entry threshold and stringent requirements for investors;
• diversion of funds for a long period;
• limited exit options;
• limited possibilities for monitoring and controlling the activities of the management company;
• high probability of fraud;
• high risks - performance results are poorly predictable and volatile.

On the other hand, hedge funds are reliable (large assets play an important role) and are, in fact, the only reasonable way to invest in the pursuit of super-profits. Profitability analysis and recommendations for choosing a fund will be discussed in the article investing in hedge funds.

Useful video