Hedge Fund Investors Warned of Energy Risks

The Energy Hedge Fund Center recently observed an increasing investor risk, due to the collapse of at least one energy commodity trading hedge fund, and also large reported losses at other funds and banks trading in energy commodities. The Energy Hedge Fund Center LLC offers analysis and consulting services in energy and environment.

This continues to demonstrate that energy is a risky sector for investors. Although many energy hedge funds continue to perform significantly better than funds focused on other asset classes, EHFC Principals, Peter C. Fusaro and Dr. Gary M. Vasey continue to warn investors about the additional and often poorly understood risks involved in energy.

The Energy Hedge Funds Center is set up to provide basic information on hedge funds that are active in the energy industry and trading energy commodities. Hedge Funds are highly secretive and it is difficult to obtain information about them and their strategies. This new InfoGrid, developed and maintained in association with Global Change Associates is the only online community focused on energy and environmental alternative investments.

“To some extent, due diligence has become mechanistic following pre-prepared questionnaires that were designed for more traditional investments,” reports Dr. Gary M. Vasey. “This mechanistic approach also speaks to a lack of understanding on the part of the majority of investors as to the underlying additional risks inherent in the energy industry. Energy is the hot asset class for investing but investors be warned, energy expertise is required to perform proper due diligence and to insure that effective risk mitigation is in place.”

In a recent article published by leading energy and utilities industry analysts and consultants UtiliPoint International, Inc., Dr. Vasey stated, “The moral of the story for investors is simply don’t be greedy and understand and mitigate your risks. This means understanding the energy industry in some detail but it also means performing proper due diligence on the investment vehicle that you chose, especially hedge funds.”

Peter C. Fusaro and Dr. Gary M. Vasey are also the co-authors of “Energy and Environmental Hedge Funds”, “The New Investment Paradigm” published by John Wiley.

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