Daily Investment Tips

There are several types of forex currency hedge funds. A Spot Forex currency hedge fund is not regulated by the SEC or the CFTC, and it offers investors a two day transaction time. A Forward Currency hedge fund is a fund where money is not traded until the specified future date has passed.

Other Types of Forex Currency Hedge Funds

Another popular forex currency hedge fund is the Swap Forex fund. Swap fund transactions are done between two parties that agree to trade two currencies with each other for a specific period of time. These currency transactions are not traded through an exchange, and standardized contracts are not used. Another basic forex hedge fund concept is the carry trade, which is one of the oldest strategies in finance. Carry trades occur when an investor borrows money in a currency with low interest rates, and invests it in another currency with high interest rates. Currency brokers realize that past trading patterns show that higher-yielding currencies maintain their exchange rate against lower-yielding currencies, and may even appreciate slightly, which allows the broker to pocket the difference in yields or what is known as the “carry.”

It is important to note forex currency trading is high risk investing. Before putting your money in any forex currency hedge funds, remember past performance is not and indicator of future performance.

written by Constantine Njeru \\ tags: Carry Trade, Currencies, Currency Brokers, Currency Trading, Currency Transactions, Exchange Rate, Forex Currency, Fund Transactions, Hedge Fund, Hedge Funds, High Interest Rates, High Risk, Low Interest Rates, Money Currency, Period Of Time, Spot Forex, Trades

Last week price drop in oil seemed to have hit, large hedge funds, hard. Clive capital a London based commodity hedge funds has come out and confessed they incurred losses of $4oom.

According to a report seen by Ft of UK, the management said it was at loss to explain what had caused oil prices to tumble so fast.

The scale of this loss demonstrates that even the savviest investors are not immune loss. Investors should take note of that footnote at the end and bottom of investment promotion brochures, Past Performance is not an indicator of future performance!

written by Constantine Njeru \\ tags: Brochures, Capital Hedge, Commodity, Footnote, Hedge Fund, Hedge Funds, Investment Promotion, London, Losses, Oil Loss, Oil Price, Oil Prices, Savviest Investors

John Meriwether is a good example of why many investors never learn from their mistakes. Investors delude themselves thinking “This time its different”

John Meriwether was the co-founder of Long Term Capital Management, together with two future Nobel Prize winners, Myron Scholes and Robert C. Merton. With this two brainys on board it seemed this hedge fund was a sure bet.

The fund got off to a flying start, it raised $1.01 billion from high net worth individuals. It delivered annualized returns of over 40% (after fees) in its first years. Nothing could go wrong.

But when the Russian crisis hit in 1998, it lost $4.6 billion in less than four months. With mounting losses and a bailout from the FED the fund was closed in early 2000.

You would have thought John Meriwether had learnt from his mistakes. But immediately after LTCM closed shop Meriwether launched JWM Partners. A fund that would continue many of LTCM’s strategies. He managed to convince investors to invest in him by promising them this time he was going to use less leverage.

Whoever said lightening doesnt strike twice was wrong, just like the Russian Financial crisis of 1998 killed LTCM, the 2007 Credit crisis struck JWM partners. JWM Partners LLC was hit with 44% loss from September 2007 to February 2009 in its one of its fund. As such, JWM Hedge Fund was shut down in July 2009.

Never buy into the idea “This time it is different.”

written by Constantine Njeru \\ tags: Bailout, Bet, Co Founder, Credit Crisis, First Years, Four Months, Hedge Fund, High Net Worth Individuals, Investors, John Meriwether, Jwm Partners Llc, Leverage, Long Term Capital, Long Term Capital Management, Losses, Myron Scholes, Nobel Prize Winners, Robert C Merton, Russian Crisis, Russian Financial Crisis