Shaked Capital Advisors

Benefits of Hedge Versus Mutual Funds
  • Tendency for superior track records with higher performance, lower volatility, lower drawdown and capital preservation
  • Possible capital appreciation in bull, bear, inclining, declining and directionless markets due to flexible market correlation and beta, with long exposure (expected capital appreciation when a market inclines) and short exposure (expected capital appreciation when a market declines) as well as exposure to positively and negatively correlated assets (assets expected to appreciate and depreciate in same market conditions) 
  • Absolute instead of relative benchmark objectives, avoiding justification of poor or negative performance because it is higher or less negative than the performance of a market or an index
  • Transparency due to incentive to create credibility
  • Capital preservation, investment risk moderation and accountability due to co-investment by principal, family and friends
  • Fee structure dependent on performance success due to reliance on performance fee (annual percentage of net profits) instead of management fee (annual percentage of assets), front load fees (upfront entry fees charged by mutual funds, generally up to 8.5% of assets invested) and back load fees (deferred exit fees charged by mutual funds, generally up to 6% of assets redeemed)
  • Tendency for exceptional track records due to relatively small asset base, agility and critical importance of performance success
  • High transparency due to significant incentive to create credibility
  • Capital preservation, investment risk moderation and accountability due to significant co-investment by principal, family and friends
  • High liquidity due to unattractiveness to investors of lock up of their capital
  • Fee structure heavily dependent on performance success due to substantial reliance on performance fee because management fee tends to be small
  • Possibly discounted or negotiable management and performance fee structure due to early stage of hedge fund development and desire to attract investors

Benefits of Emerging Versus Established Hedge Funds