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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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Hedge fund performance

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.

Q: Why are hedge funds not available to individual investors?

A: Actually hedge funds are available to all investors who meet the minimum allowable account size. (Hedge funds use these high minimums to make their SEC compliance easier because some procedural shortcuts are available to firms that only accept wealthy or "accredited" investors). A few hedge funds accept investors with a minimum of $25,000 but most have a minimum investment of $100,000. A better question might be why would an individual investor want to be in a hedge fund? Hedge funds can outperform other investments when the market is performing poorly but under-perform when the market is healthy. Sure, hedge funds were hot during the 2000-2002 market slump but average performance has turned south. The average hedge fund returned only 5.66% per year averaged over the past five years ending 12/31/05 when the S&P 500 Index returned an average 14.38% for the same period.

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