Good Morning, Noyackers!
Today we’re unpacking hedge funds for the first time in Noyack Wealth Weekly. While they offer high returns and diversification, hedge funds also have unique risks and complexities.
Also, we’re excited to introduce NWW’s FIRST guest contributor Herman Laret as Noyack Wealth Weekly’s first guest contributor and writer for our newsletter. Herman, founder of Laret Capital Partners, brings over 30 years of expertise in alternative investments.

Herman Laret, NOYACK Contributor
By the end of this newsletter, you’ll understand how hedge funds work and whether they align with your financial goals. Don’t miss our podcast with Herman, as he shares his insights and experience.
What is a Hedge Fund?
Hedge funds are private investment vehicles aiming for above-average returns using advanced strategies like short selling, leverage, and derivatives. With fewer regulations than mutual funds, they offer flexibility but come with higher risks.
Think of a hedge fund manager as the “coach” of a team—crafting strategies, analyzing opportunities, and making decisions across assets like stocks, bonds, commodities, and private equity.
How Hedge Funds Work?

Role of the Fund Manager:
- Develops sophisticated strategies tailored to market conditions.
- Conducts in-depth research to uncover opportunities.
- Balances portfolio risk for optimal returns.
Liquidity and Fees:
- Lock-Up Periods: Funds may be inaccessible for 1–3 years.
- Redemption Windows: Withdrawals are allowed on a scheduled basis.
- Fees: Hedge funds follow a “2 and 20” model—2% annual management fees and 20% of profits, applied above a high-water mark.

Key Investment Strategies:
- Equity Long/Short: Profiting from rising and falling stock prices.
- Event-driven: Capitalizing on mergers and acquisitions.
- Global Macro: Trading based on economic trends.
- Quantitative: Using algorithms to identify opportunities.

Are Hedge Funds Right for You?
Hedge funds offer advantages but aren’t for everyone.
- High Entry Barriers: Minimum investments often start at $1 million, targeting accredited investors.
- Complexity: Strategies like leverage amplify both risks and rewards, requiring market expertise.
- Liquidity Limits: Long lock-up periods restrict access to funds.
For Millennial investors building their portfolios, focus on gaining experience and exploring accessible alternatives first.
Why Invest in Hedge Funds?
Hedge funds are designed to elevate wealth management for those with significant capital:
- Diversification: Reduces overall risk by investing across strategies and asset classes.
- Active Management: Skilled managers optimize opportunities in volatile markets.
- Uncorrelated Returns: Hedge funds perform independently of traditional markets, adding stability.
- Unique Opportunities: Gain access to niche markets and alternative investments.
Pro Tip: If your net worth exceeds $5 million, hedge funds can enhance your portfolio. Otherwise, explore hedge fund-inspired ETFs or mutual funds to learn and benefit from similar strategies.

How Hedge Funds Can Help You?
Even without direct access to hedge funds, their principles can inform your approach:
- Aspiring Investors: Strengthen your portfolio with diversification and risk management.
- Cautious Risk-Takers: Use ETFs or mutual funds to explore advanced strategies.
- Goal-Oriented Planners: Apply uncorrelated returns and active strategies to long-term goals like retirement or wealth building.
Hedge funds foster a mindset of proactive, strategic investing, offering principles to grow your wealth regardless of your starting point.
Actionable Takeaways for Millennial Investors
- Explore Hedge Fund-Inspired ETFs: Start with ETFs mimicking strategies like global macro or equity long/short for low-cost exposure.
- Test Alternative Assets: Try small investments in REITs or private equity funds to familiarize yourself with non-traditional investments.
- Follow Hedge Fund Trends: Stay updated on how hedge fund strategies perform across different market conditions.
- Expand Your Knowledge: Take courses or read about leverage, derivatives, and advanced strategies to prepare for future opportunities.
- Assess Your Risk Tolerance: Use tools to gauge how hedge fund-style investments fit with your goals.
Hedge funds may seem exclusive, but their principles are accessible and invaluable for building a resilient, diversified portfolio.

Want to learn more? Tune in to our latest podcast episode below for an in-depth look into the Hedge Fund industry.