Tear Sheets are part of the standard marketing materials hedge funds distribute, generally on a monthly basis, that describes their performance for the previous month, recaps their strategies and provide key information about the fund. They are intended for prospective investors, and are one important piece of information that should be considered before writing those checks.
So, what is this?
It’s the standard marketing piece hedge funds send around at the end of each month that shows how they did, recaps their strategies, and tells you the key facts. Extremely often, if you are interested in a fund, you’ll get these for a few months before investing and “watch the movie” of how it performs before investing.
What are some of the things to look for in a tear sheet?
Number one, of course, is return for the month, and this is a great time to look at one. May was brutal in the stock markets, so let’s see how those funds that promised to hedge against losses really did… it was an acid test month. I’ve been watching one fund, in particular, a long-short fund that underperformed the overall markets early this year, when everything was shooting up; but this fund was up ½% in May and now has outperformed the market for the year by 6%. That’s beautiful.