Sunday, June 30, 2013

How to invest hedge funds and index funds?


Most investors, thanks to partly financial regulations, invest their  money in index funds. These funds usually invest in all stocks –including failing companies and stocks with sky-high valuations and in fact aren't the right choice for most investors. Last decade was a good example: S&P 500 index has lost 24.8% in the ten years between 2000 and 2010 even when you take the dividends into account. While indexes performed poorly, talented hedge fund managers like billionaire David Einhorn returned 249.4% after fees and expenses during the same 10 years! Not only that, in fact, he has beaten the market in every single year.

But as you may have known, if you are not very rich, you cannot invest in hedge funds. In fact, even the very rich can’t invest in the most successful hedge funds because most of them are closed to new investors.

So your only option seems to use your own time and knowledge to pick stocks to invest. But just in USA markets, there are more than 6000 publicly traded companies. You probably don’t have the knowledge, resources, or time to follow and analyze all of these companies.

But there are some other options for retail investors out there. One of them is Insider Monkey.

Insider Monkey, one of the fastest growing financial research websites on the web, read by 1.5 million people every month, is a good option to mimic the investments by hedge funds. Although they have a web site with some free content, with a yearly fee, they also offer a premium newsletter that isolates the hottest stocks among the BEST hedge funds.

Insider Monkey is managed by New York based Ian Dogan who has a Ph.D. in financial economics and is an expert in insider trading. He has managed a $200+ million portfolio within a large hedge fund and now he is utilizing his skills to bring alpha generating investment strategies to Insider Monkey’s premium members.

Insider Monkey claims that their 15 Stock Small Cap Strategy has beaten the market by 18 percentage points per year between 1999 and 2009. Since the end of August last year, they have been sharing the stock picks of this strategy and according to them these stocks gained an average of 48.9% between September 4th and May 31st, vs. 17.8% for the S&P 500 index.

The subscription to Insider Monkey quarterly premium newsletter is for $499 per year. Other than quarterly newsletters, subscribers also get monthly mini newsletters. If you would like to see what does newsletter look like, you can download the free edition here.

Disclaimer
This blog article is to provide general information only and should not be treated as an invitation to buy or sell anything.  Users of this article should consider this as a one of the many factors in making their investment decision. Users should make reference to other sources of information and specific investment advice to obtain a more objective view of the market. Asia Singapore shall not be responsible for losses suffered.

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