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Five Things to Ask Before Investing in a Hedge Fund
CNBC.com | April 06, 2012 | 04:35 PM EDT

“Under the old rules, part of my job was to keep hedge-fund managers from talking about what they really do,” says Mitch Ackles, president of the Hedge Fund Association , a public-relations group. “You turn on CNBC and see them being interviewed, but only about their views on the economy, not their specific business.”

By allowing hedge-fund managers to talk more openly about their products, the new rules will make hedge funds more transparent, says Ackles, increasing the information available, so investors can make educated decisions. The openness will in turn foster employment in the hedge-fund industry, as new MBAs and other jobseekers come to understand the business better.

Still, no one seems to disagree that the JOBS Act puts the onus on investors to know what they are getting into. Whether the idea comes from a hedge fund directly, a notice in a newspaper or through a trusted advisor, the usual safe-investing advice still applies.

“Have the fund provide the Alternative Investment Management Association ’s due-diligence questionnaire,” he says. “It’s the industry standard, and most managers usually have already filled them out. “

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