Hedge funds are generally more liquid than investments in real estate, venture capital or private equity transactions.
Many of the world’s best investment managers head their own hedge funds. The best hedge funds typically outperform the best mutual funds.
We want the assets of the Eagle Rock Diversified Fund to be managed by the very best money managers we can find and with whom we can invest. For the most part, these are the same managers who invest assets of the largest institutional investors including pensions, endowments, trusts, family offices and others. Plus, they almost always manage their own capital in their funds. Our interests are aligned.
The hedge fund industry attracts money managers wanting to head their own fund because:
- it is their business. They own it
- they get to manage their own capital and the capital of investing limited partners exactly the way they want
- if successful, they earn substantial management and performance fees.
A typical $500 million hedge fund netting 15% in a year would generate over $22 million in fee income for the management team that year:
1.5% annual management fee $ 7.5 million
20% incentive fee on net gain $15.0 million
Total One Year Fees $22.5 million
Because the hedge fund industry is so lucrative for successful managers it attracts many new managers every year. Many of whom fail when their fund’s performance disappoints and fails to attract new investors’ capital and experiences serious redemptions. That’s one reason why the Eagle Rock Diversified Fund only invests in audited hedge funds with successful track records of 3 years or more.
To minimize risk the Eagle Rock Diversified Fund invests in a diversified portfolio of hedge funds, each with its own unique investing strategy and strong risk management system.