Hedge Fund and Investment Market Research

A hedge fund pools investors’ money, similar to a mutual fund.

A registered investment advisor or money manager sets up these funds. The hedge fund manager raises money from outside investors. He or she will then invest it according to an agreed-upon strategy. Some hedge funds specialize in real estate, while others engage in private equity. The first hedge funds held both long and short stock positions. They thus “hedged” their bets. The name has stuck and expanded to include all pooled capital arrangements.

So what is a hedge fund manager? What does he or she do? Hedge fund managers are more notorious than understood. One of their primary functions is to find investors. Once the investors are on board, the fund manager decides what to do with the pooled money. Thus, a hedge fund manager spends his or her day studying the current state of the financial markets. He or she also spends a good part of the day making investment plans.

The next natural question would be how to invest in a hedge fund. Buying into a hedge fund is not as easy as investing in a stock or ETF. New investors must qualify under the rules of the Securities and Exchange Commission as an accredited investor. To qualify, a would-be investor must have an income of no less than $200,000 in each of the past two years. He or she must also expect the same for the current year. Investors can also qualify if they have a net worth of $1 million. This amount excludes the value of a primary home.

Who is Involved in Hedge Funds?

Investor returns on hedge funds have been sluggish lately. In spite of this, the top hedge fund managers have raked in more than $10 billion in personal income. Top earners include James Simons of Renaissance Technologies. Ray Dalio (Bridgewater Associates) and John Overdeck (Two Sigma) also had significant earnings. Other notable fund managers are David Tepper, Kenneth Griffin, and Paul Singer.

Simons, Dalio, Tepper, and Griffin have shown spectacular performance in recent times. They each made more than $1 billion as the industry shows signs of a rebound. Tepper made more than twice his previous earnings. This happened even though his fund’s 13 percent gain did not keep pace with the S&P 500. Teppers’ earnings also fell behind the fund’s historical annualized gain of 30 percent.

Why is a Hedge Fund Important?

Hedge funds exert a tremendous influence on stocks and bonds. They also influence currencies, commodities, and other markets. They have been major players in almost all aspects of modern finance. They also affect mortgage lending. Hedge funds, as a group, have a considerable amount of assets under their control. They are not afraid to use these assets in trading locations around the world.

Hedge funds also reduce mispricing in financial markets. Whatever market conditions are prevailing, they are an essential source of liquidity. They add depth and breadth to the capital markets. Of course, they don’t execute these roles out of a sense of principled purpose. However, they are a critical part of what makes the US financial markets work well. They absorb shocks and allocate savings to their highest return.

The Future of Hedge Funds

Experts expect exceptional growth and change in hedge funds soon. The current hype surrounding cryptocurrency and the blockchain will gather more acclaim. Some funds have already started implementing these technologies. Funds will put other techniques, such as quantitative analytics, in place. They will also use machine learning and AI to improve efficiency and accuracy.

Why Market Research is Important

Market research has an essential purpose: to gather data on customers, markets, competitors, companies and value chains. This data helps businesses decide whether hedge fund investments are right for them. It enables companies to develop appropriate products and services. These products and services will, in turn, add value to their customer offerings.

Hedge Fund Strategy Consulting

About SIS FinTech Research and Consulting

SIS FinTech Consulting provides comprehensive insight solutions to Hedge Funds and Investment Management companies.  We conduct:

  • Focus Groups
  • Investment Insights
  • Opportunity Identification and Assessments
  • Market Entry, Sizing & Opportunity
  • Market Intelligence
  • Consumer Surveys
  • Industry Tracking
  • Competitive Analysis
  • Key Opinion Leader & Decision Maker Research
  • FinTech and Digital Innovation Insights
  • B2B Executive Interviews