October 21, 2006
Protecting The Human Face
I’ve talked so much about the Amaranth collapse and its aftermath, and the logistics involved. But somewhere along the way, I forgot the human face – the investors. What can you do to avoid losing your money in a hedge fund collapse? Firstly, ensure that no more than 10 percent of your asset total can go into a single hedge fund. And no more than 35 percent of all your assets should be placed in hedge funds.
This would force hedge funds to "know YOU – the customer" that much better. It would also diversify investors. This would also would allow regulators to keep the bulk of their focus on those investments that are common tools for average investors.
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