The Basics of Hedge Funds & Administration Services

As your local professionals in the Tri-State Area, Halpern & Associates discuss the basics of a hedge fund.

What is a Hedge Fund?

This is a non-legal term that was originally coined to describe a certain private and unregistered investment pool. It uses complicated hedging and techniques to trade in the corporate equity markets. Previously, they were limited to only wealthy investors ready to take risks. A hedge is one that averages out gain and loss, creating a trading position that is totally neutral.

At the moment, hedge funds aren’t described as just one thing. They are flexible as they might or might not use leverage. As the investor, you are allowed to make bets that are based on a global event or you might look at the technical aspects of a stock or security with the aim of sighting a mispricing in the trade market.

Hedge funds are similar to mutual funds. They are both polled investment tools. They work by getting money from investors and investing it afterward on a collective basis. They differ in one aspect though, hedge funds are not required by law to register to follow federal regulations laws. 

Due to the fact that they have no federal regulations binding them, hedge funds, unlike mutual funds, are able to partake in sophisticated investment techniques to a larger extent, even though there are some restrictions set by the anti-fraud unit.

Types of Hedge.

Direct Hedge.

This is a type of hedge that involves swapping one asset, e.g. a stock with another asset that has similar price movement. The two assets must have a similar trading pattern. A typical example of this is when you swap a common stock position with call options.

Cross Hedge.

This is a type of hedging that involves swapping an instrument with another one that is not similar. This usually involves purchasing some preferred stocks and hedging their position with some Treasury futures.

Dynamic Hedge.

This has to do with puts, with the investor changing the amounts of puts in a position with time, though it is highly dependent on the market environment. This type of hedge is very important as it protects you from any risk that is associated with long positions. 

Static Hedge.

Just like the dynamic hedge, the static hedge also tries to eliminate risks involved in a trade. Its working mechanism is simple. A target option is set, thus not much adjustment is required as it will just follow the value of the target option. It is sometimes called the static replicating portfolio. It has a fixed and unaltered hedge until maturity. 

The main objective of a hedge fund.

All hedge funds have one thing in common, they want absolute returns and to make money for the investors. This is the reason why every type of market strategy can be used to ensure that the hedge fund achieves its goals. 

Hedge fund administration services.

Hedge funds cannot be operated without a third-party hedge fund administration service, thus it is recommended to work with a group that has your best interest in the long run. Learn more about these services and other offerings from Halpern & Associates by contacting one of our professionals today.

The Importance of Bookkeeping for Businesses

Halpern & Associates provides essential bookkeeping services to allow business owners can focus on their business and what they do best. 

Accurate bookkeeping is one of the things that will help keep your business together and running smoothly especially if you run your own business. To so many people, it may seem like a chore but keeping track of your revenue and other events will go a long way in ensuring your business succeeds. Many businesses have failed because they failed to keep proper records of their revenues and expenses. Bookkeeping is basically an accounting process that involves you classifying, reporting and analyzing your data and keeping them organized and accurate.

The importance of bookkeeping to your business cannot be overestimated. The professionals at Halpern & Associates are here to assist you with all of your bookkeeping needs so that you are able to focus on other important aspects of your business. 

Below are some of the most important reasons why bookkeeping is so essential to the success of your business. 

You will fulfill your tax obligations.
With bookkeeping, you will never lose track of paying your taxes. Bookkeeping makes it possible for you to track any information or document regarding your tax issues. While others are trying to rush and get their bills in order, yours will be nice and organized. Once you have a balance sheet, Cash Flow, and Profit & Loss, then tax returns will become a very easy task for you. 

Accurate and easy report to the investors.

Your investors want to know what is happening with your business, thus the need to keep them informed at all times. It will be easier for you to report and provide accurate information to your investors if you have a balanced book. Crucial information on your revenue and expenses will be provided to your investors if you do your bookkeeping well. Other information like charts, graphs and lists can also be derived from organized and accurate bookkeeping. 

Easy to plan your business.

Bookkeeping basically means you are organizing your revenue and expenses sheets and ensuring that they are accurate. With every piece of information accurate and properly filed, it will be very easy for you to plan your business as you already know your annual revenue and expenditure. If your company is on the right track, then planning will be simple and easy. 

Proper records make it easy to audit.

With bookkeeping, all your revenue and expenditure records are properly kept and organized. This will be very helpful when it is time to audit. Bookkeeping will also ensure that the invoices are kept properly, making it easy for the auditors to do their job properly. 

Keep track of your expenses.

Expenses are taken from the company’s coffers, and in case it is not properly tracked or recorded, the business might be having more expenses than revenue, thus leading it to run at a loss. However, if bookkeeping is done properly, you will be able to monitor your expenses and know when to reduce them. Keeping track of your expenses also makes it easier for your accounting and tax purposes. 

Follow your profit and growth.

Accurate bookkeeping will make it easier for you to know if your business is making a profit or not. Most business owners neglect this but it is very important to keep track of so that you can know if your business is growing. 

In general, bookkeeping makes it possible for business owners to better understand their business and to determine if they are growing or needing to make changes. Business owners will be able to track some activities in their business such as expenses, profits, cash flow and tax payment if the books are being kept organized and accurate at all times.