When hedge fund managers advertise, performance dips,
according to Fortune’s Dan Primack.
Hedge funds soon will be allowed to advertise their wares to
potential clients, thanks to a provision in last year's JOBS Act (which had no
direct relation to actual jobs). As will private equity funds, venture capital
funds and other alternative investment vehicles that heretofore were prohibited
from general solicitation.
Former SEC Commissioner Mary Shapiro opposed the change, so
she basically sat on it (apparently believing her personal opinion trumped the
directive of federal legislation). New SEC Commissioner Mary Jo White has
suggested that she'll move this and other JOBS Act provisions along shortly.
So in a few months expect the pages of your favorite
financial rag and website to contain advertisements for investment
opportunities that you probably can't afford (since you'll still need to be an
"accredited investor" to actually participate). For the 1%, however,
a word of warning: Future performance is likely to be worse than past
performance. That's the finding of a new academic paper…
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