Hedge Fund Memorandum Database
Before making an investment decision in a hedge fund, it is very important to embark on an information gathering journey as it will help in making a right decision. This information is readily available from the third party sources or a hedge fund manager. The information collected will also depend on the type of information sought and depth in which information is required. When seeking information from a hedge fund manager, it is imperative that a prospective investor identifies himself as a registered investment advisor or an accredited investor. This has now become a mandatory requirement when obtaining information.
Sometimes, only a signed document may be needed by the hedge fund managers that states that the investor attests to his or her status as an accredited investor, while some, on the other hand, may request submission of personal financial statements. Thus, when it comes to examining a hedge fund, you need to have the proper resources for the same. If a person has the required experience as well as the resources that are needed to make an investment in a hedge fund, it is vital that due diligence is conducted in order to make sure that the money is put in a productive place.
The Hedge Fund memorandum database is the platform where monthly returns are posted by the managers and the potential investors can easily view them. At the same time, it is significant to understand that this is not the yardstick to take a decision about making an investment in the hedge fund. Investors may be led towards the wrong path when chasing returns and it can prove to be highly detrimental on their capital. These alternative investments must be properly and thoroughly researched by the investors in terms of strategy and not by returns. Advisor’s help can be taken by the potential investors from different categories after going through their approach to the market. When it comes to reviewing, one can bank upon a simple document that is known as pitchbook. This document basically presents the firm information in great detail along with its funding strategies. This document also helps in determining whether there is any need for complete due diligence.
The subscription documents and offering memorandum can be reviewed in case the fund appears to be interesting. Careful attention needs to be paid on these legal documents when reviewing them. The two major areas that need to be perused are the securities descriptions and stated investment objectives wherein investment is allowed by the hedge fund. Greater flexibility is being acquired by the hedge funds these days that help in security investments outside the core capabilities of the fund and historical trends. Opportunistic investments can be made by the funds in temporary attractive sectors by ensuring a broader mandate. The hedge fund manager certainly gets more investment opportunities with this, but at the same time risk management issues also increases considerably. Thus, it is vital to take any decision after a lot of deliberation and research and avoiding broad mandate.