An investment advisor or investment advisor representative may only transact business in a particular state after licensure or satisfying qualifications, requirements of that state, or only if they are excluded or exempted from the state's investment advisor or investment advisor representative requirements, as the case may be. Follow-up, individualized responses to consumers in a particular state by an investment adviser or investment advisor representative that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's investment advisor, or investment advisor representative requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of an investment advisor or investment advisor representative, a consumer should contact his or her state securities law administrator.
Risks of Investing in Hedge FundsPLEASE READ THE FOLLOWING STATEMENT CAREFULLY When considering alternative investments, such as hedge funds and hedge funds of funds (collectively referenced in this document as “Hedge Funds”), you should consider various risks including the fact that some Hedge Funds use leverage and other speculative investment practices that may increase the risk of investment loss, can be illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees, and in many cases the underlying investments are not transparent and are known only to the investment manager. With respect to alternative investments, such as Hedge Funds, in general, you should be aware that:
- Returns from some alternative investments, such as Hedge Funds, can be volatile.
- You may lose all or a portion of your investment.
- With respect to single manager products, the manager has total trading authority. The use of a single manager could mean a lack of diversification and higher risk.
- Trading may take place on foreign exchanges that may not offer the same regulatory protection as United States exchanges.
- There is often a lack of transparency as to the underlying investments of Hedge Funds.
- With respect to a hedge fund of funds, the fund’s manager has complete discretion to invest in various sub-funds without disclosure thereof to you or to us. Because of this lack of transparency, there is no way for you to monitor the specific investments made by the underlying hedge funds or know whether the sub-fund investments are consistent with the hedge fund’s historic investment philosophy of risk levels.
- A hedge fund of funds invests in other funds and fees are charged at both the fund and sub-fund level. Thus, the overall fees you will pay will be higher than you would pay by investing directly in the sub-funds. In addition, each sub-fund charges an incentive fee on new profits regardless of whether the overall operations of the fund are profitable.
- There is no public secondary market for Hedge Funds interests. Transfers of interests are subject to limitations.The funds’ manager may deny a request to transfer if it determines that the transfer may result in adverse legal or tax consequences for the fund.