However, although domestic investors are no longer unfamiliar with the words "private equity fund", "sunshine private equity fund" and "hedge fund", there are still many misunderstandings in their knowledge and understanding of this industry.
As stated at the beginning of "Decryption of Hedge Fund Portfolio", hedge funds are essentially funds that hedge or avoid potential risks, and their hedging methods and means are varied, resulting in very rich investment strategies, which are not as narrow as short selling stock index futures.
A real hedge fund is neither a monster nor a scourge, nor a mysterious trader, nor an expert in the world. Instead, professional investment managers rely on their own experience and unique skills to seek stable and continuous absolute returns for customers in a professional, disciplined and systematic way, and at the same time charge reasonable management fees and performance fees.
Broadly speaking, the securities collective fund trust, securities asset management plan, special fund account, futures asset management plan and contractual securities private equity fund currently managed in China can all be regarded as hedge fund structures. Unlike Public Offering of Fund, the investment goal of hedge funds is to obtain absolute returns, not to compare with market indexes; Hedge funds often charge excess performance fees according to the "high water level method", not just a fixed fee according to the management scale. Therefore, in China, investors judge whether a fund is a hedge fund structure, not by its name, nor by its so-called "quantitative hedging" strategy, but by its investment objectives and charging methods.
For a complete and sound capital market ecology, hedge funds are indispensable investment forces. The existence of hedge funds is of great significance for building a multi-level capital market, cultivating professional institutional investors and meeting the diversified financial needs of investors with different risk preferences. At the same time, the existence of hedge funds also makes the capital market pricing more adequate and effective.
Consumption is becoming more and more attractive, and there are a large number of hedge funds (securities private equity funds) in the market, with diverse strategies and different performances. How should investors evaluate the merits of hedge funds? How to choose hedge fund investment? How to treat the essence of hedge funds? How to build a stable hedge fund portfolio? Various problems have plagued domestic high-net-worth investors and even many institutional investors.
This book is like a "timely rain" in the industry. From a professional point of view, it is just the right time to summarize and analyze in detail the key issues such as the meaning, structure, strategy, risk management, selection process and the construction of hedge fund portfolio.
The soul of hedge fund is the manager of hedge fund. The hedge fund industry is fierce and cruel, and it is constantly evolving. There are many talents, but there are also a few "naked swimmers". Excellent hedge fund managers with long-term stable performance are rare. If you observe for a long time, you will find that excellent fund managers have some common characteristics. For example, to have pride in your bones is not arrogance, but the bottom line and principle in the professional field, which is a question of right and wrong; To have professionalism, not only refers to professional skills and experience, but also includes professionalism and professional attitude; It is necessary to have humanistic spirit and feelings of home and country, which is not only reflected in its investment philosophy, but also includes responsibility and responsibility for customers and industries. Therefore, it can be said that if we evaluate fund managers from a medium-term perspective, we need to pay attention to their professional ability, experience and skills, then choosing fund managers from a long-term perspective is an investment in their personal character and team character. As mentioned in this book, "if you can only use one word to describe the most important indicator of choosing a hedge fund manager, it is honesty."
The magic weapon for hedge funds to keep their performance evergreen is investment process management. This book has mentioned this point many times in the "Troika" of due diligence, hoping that investors should pay attention to all aspects of investment process management, rather than simply choosing hedge funds based on historical performance.
The core of hedge funds is risk management, which is the source of long-term absolute returns. Hedge funds with excellent long-term performance put risk management first. Of course, due to the diversity of hedge fund strategies, the process, means and objectives of risk management are different among different strategies, but risk management should always be the first consideration. The same is true for evaluating and investing in hedge funds. From the perspective of FOHF (funds investing in hedge funds), portfolio risk management should also be the primary consideration. The risk management of FOHF is more complicated, because it involves not only macro-risk judgment, hedging strategy screening and fund manager evaluation, but also a lot of trivial details such as operational due diligence and risk management due diligence, and there is no shortage of "troika". Moreover, the process of risk management is continuous, rolling and dynamic, and it is by no means achieved overnight. It pays attention to the combination construction in the early stage and ignores the combination management in the later stage. It is conceivable that the investment threshold and professional difficulty of FOHF are quite high, and the risks involved in reading data, ranking and investing in hedge funds are also quite large. In fact, risk management cannot be overemphasized. This book has spent a lot of ink and logic, emphasizing that when evaluating hedge funds, we should not only pay attention to investment due diligence, but also do operational due diligence and risk management due diligence.
The practical exploration of FOHF in China began in 2009, and there have been two small climaxes from germination to today. Nowadays, the concept of FOF has been widely spread, and more and more institutions have joined the investment practice, which is a very good thing for the healthy development of China's hedge fund industry, for cultivating professional institutional investors and popularizing the correct investment concept.
However, we also see that most domestic FOHF investment institutions are still in the initial stage of exploration, and their investment ideas, investment ideas, investment methods and investment systems are not yet mature. From a practical point of view, due to the constraints of concept, team, experience and business model, many FOHF still tend to invest in due diligence, without considering or rarely considering other "two carriages". Moreover, even the investment due diligence "this carriage" lacks the professional depth it deserves. This is not conducive to the establishment of a worrying professional image of the FOHF industry. The publication of this book coincides with the right time, systematically and comprehensively expounds the most basic work that FOHF should do, and is an excellent guide to FOHF industry investment.
In addition, it should be pointed out that FOHF is different from the general asset allocation in the industry. They are not only different in the scope of investment, but also in the investment concept and concept, the systems, tools and methods used, and even the professional width and depth of the investment and research team. Although the scope of FOHF investment also includes bond strategy, credit strategy, interest rate exchange rate strategy and so on. It is still problematic to invest in FOHF with the idea of large-scale asset allocation. For example, if asset allocation is a macro-level investment and hedge funds are micro-level investments, then FOHF is like a meso-level investment. The middle view is contained in the macro, which is wider than the micro, but it is an exclusive and alternative investment field. This point is emphasized because some domestic institutions use large-scale asset allocation methods and models to invest in FOHF, or try to establish a unified model to cover FOHF investment. Although these models are helpful for FOHF investment, they are often not deep enough, thus failing to achieve the expected investment objectives of FOHF, and may even bring portfolio risks.
Nie Jun and Wen Fang, the authors of this book, have been immersed in the hedge fund and FOHF industries for a long time, and have long been concerned about the development of the hedge fund industry in China. They strive to publicize and practice the correct concept of hedge fund industry and spare no effort to promote the standardization and specialization of the industry. Their spirit is very admirable.
FOHF and hedge funds are the downstream and upstream of the hedge fund ecological chain. The development of FOHF will greatly promote the standardization, specialization and institutionalization of the hedge fund industry, which is of great significance for optimizing the investor structure of the domestic hedge fund industry, promoting the survival of the fittest and healthy development of the hedge fund industry, and even promoting the improvement of China's capital market.