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February 28, 2006
Do you have the money to invest in hedge funds?
Are you looking at investing in hedge funds? Well, don't be surprised if your hedge fund manager asks you if you have the money to do so. It is largely left to the discretion of the hedge fund manager to decide if you qualify as a private investor.
In most cases, rather than posing direct questions, hedge fund managers make prospective clients fill out a lengthy questionnaire. This questionnaire would require you to provide details about your holdings, including stocks, real estate, physical commodities and commodity contracts, swaps and futures.
Essentially private investors can be categorized into accredited investors and qualified purchasers. Accredited investors have to have a net worth of more than $1 million. Qualified purchasers need to have $5 million in investments and this does not include primary residence or any property that is being used for a business.
In most cases you would not need to attach any documents to support the details that you have provided in the questionnaire, but it makes sense to be truthful about your financial standing.
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