When an investor entrusts his or her capital to stock market money managers, the investor faces a choice of investment options.
We believe that investing in a hedge fund-type structure is the best investment option for those who want to receive the best possible returns on their savings with minimal involvement in managing their capital.
The main advantages of a hedge fund structure are:
Low minimum investment threshold
Transparent fees and commissions
Reporting is based on the calculations of an independent auditor
Regular dividend payments
Absolute profitability strategies (profit in both rising and falling stock market)
High security of funds due to the strict controls of European regulation
So why are other discretionary investment management tools not as good as investing in a hedge fund?
Standard discretionary investment management
Investing through discretionary investment management usually requires a contract that outlines the parties’ obligations. Early termination of such a contract can result in serious penalties. Usually, the management company's fees are discussed individually with each investor, so an inexperienced client may well agree to commissions that are above the market. If the agreement includes purchasing Eurobonds on the OTC market, those purchases can be made at higher prices than the market allows.
The main disadvantages of this investment tool are high internal management fees (usually 3-5%), inconvenient procedures for selling shares of such a fund (often possible only by personal request to the managing company), and a Long-Only management strategy (making money only in a rising market), which entails the risk of drawdown during market corrections. In most cases, coupons and dividends on assets acquired by the fund are not paid out but reinvested, which rules out the possibility of living off of investments a lá a rentier.
Very low liquidity of this instrument and high internal marginality allows the broker to make money in any event, while the investor makes money only if market conditions are in their favor. In addition, it should be noted that most structured products do not contain basic investment instruments but rather complex derivatives, which carry additional counterparty risks.
Automatic following strategies
Automatic following is a service that allows an investor to automatically copy the transaction strategy of another investor who is supposed to be more experienced and successful. High internal commissions and occasional poorly skilled managers due to the ease of registering a strategy, often lead to the most unfortunate consequences for a gullible investor attracted by huge returns achieved in the past.