3/14/2013

First why would you want to build your own hedge fund?

1) Because the top hedge funds (the top 5%) have returned over 36% annualized over the last 15 years versus 4% annualized in the S&P 500. To put this in perspective if you would have put just $10,000 (everyone has 10K in their retirement account right?) 15 years ago in the world’s top hedge funds you would have $1,000,000 today. That’s right you would be a millionaire today off just a $10,000 initial investment.

2) You can’t invest with the top Hedge Funds because they are only for the mega rich, you need a minimum of $10 million dollars in cash to invest with the top hedge funds.

3) When you build your own Hedge Fund it allows you the ability to profit in any market, Bull or Bear Stock Markets, and in any asset class. Basically it is a cash machine that will consistently produce 30% plus returns every single year.

4) Your Mutual Fund and Stock Broker can not and does not have the ability to build a hedge fund for you, I will tell you why in a second, also these same mutual funds and stock brokers still charge you a management fee and commission even if you lose money, so basically when you invest in a mutual fund or with a stock broker you always lose and they always win. Remember a Hedge Fund is different, a Hedge Fund Manager only gets paid when he makes a profit for his investors, novel concept huh?

The Secret Ingredients to building your own Hedge Fund

1) The ability to Short the Market, or short asset classes such as commodities, real estate or bonds. Your mutual fund can not do this, that is why you lost money in 2008 and 2011.
2) The ability to buy any asset class in the world at any time, again mutual funds just buy stocks and bonds, they do not buy oil, gold, currencies etc. That is why they miss out on the huge returns that Hedge Fund Managers produce, because a lot of times the best investments are not in stocks or bonds but are in commodities and foreign currencies.
3) Leverage, by far the most important ingredient. By law under the SEC, mutual funds are not allowed to use a lot of leverage or any, therefore they can not generate the same returns that the top Hedge Fund Managers use, Hedge fund use a minimum of 2x to 3x leverage or 200% or 300% leverage on their investments, mutual funds use 100 to 130% leverage, a tiny amount compared to what the top hedge fund use. So if your mutual fund returned 15% last year on stock, a hedge fund that invests in the same stock would have returned 30% to 45% a huge difference in returns.

So those are the ingredients.

After 12 years of working in the Hedge Fund Business, I can finally say the retail investor is on equal footing with the top hedge funds now, due to these new products.

Put it this way I built my own Hedge Fund with just a $10,000 account, using these new products that any retail trader can use with any online brokerage account, and the results are amazing. I backtested the results going back to 2008.

Unfortunately due to regulations I can not publicly post these returns, but I do promise they are eye popping and even better than the 36% annualized returns I talked about above, but if you would like to email at wmeade@purealpharesearch, I am allowed to give each person a copy of the returns, the products I used to get these returns and the strategy.

Will Meade
Editor of The Billionaires Portfolio