Hedge Fund Investing Through Your IBKR Account
PRODUCTS
Find Investment Opportunities in the Hedge Fund Capital Introduction Program
The IBKR Advantage
- Review performance data for independent hedge funds
- View private placement memoranda and subscription information
- Use a secure, password-protected area of our website to invest
- Directly contact hedge funds or request a hedge fund contact you
Hedge Fund Investing
A Path for Sophisticated Investors
Interactive Brokers’ Hedge Fund Capital Introduction Program brings the traditional capital introduction model online. The program allows hedge funds that use IBKR as their principal prime broker to market their strategies to IBKR clients who are Accredited Investors or Qualified Purchasers, and to other participating hedge funds.
- Access participating hedge funds through a secure, password-protected area of our website.
- View and download key fund materials, including offering documents, private placement memoranda, and subscription details.
- Connect directly with funds or request contact. Once subscribed, transfer assets seamlessly between your IBKR account and the fund.
How Can I Participate?
Eligible clients can access the Hedge Fund Capital Introduction Program by logging in to the Client Portal or by visiting the Investors Marketplace.
Minimum Investments Allowed by the Funds
The minimum investment for most independent funds participating in the Hedge Fund Capital Introduction Program is USD 25,000. However, some funds may have higher minimum investment requirements.
Risks of Hedge Fund Investing
- Funds participating in the Hedge Fund Capital Introduction Program may not be registered under the securities laws of the United States, any state, or other jurisdictions. Please note, the program does not constitute an offer to sell shares of any fund. An offer to invest in a fund can only be made through the Private Placement Memorandum for that specific fund, and only to investors who meet the necessary eligibility requirements.
- Investing in hedge funds is speculative and involves a high degree of risk. Only sophisticated, high-net-worth investors with a high-risk tolerance should consider participation.
- The hedge funds listed on the website are independent entities and are not under the supervision of Interactive Brokers. As such, Interactive Brokers is not responsible for their trading decisions or liable for any resulting losses.
About Hedge Funds
Hedge funds are privately managed investment funds that pool capital from accredited or institutional investors and aim to earn returns through a wide range of strategies, including those beyond what traditional mutual funds or ETFs pursue.
Key characteristics of hedge funds include:
- Exclusive access: Minimum investments are typically significant, which may limit access to wealthy individuals and institutions (e.g., minimum investment might be $1 million or more).
- Flexible strategies: Can invest in stocks, bonds, currencies, derivatives, commodities, real estate, and more.
- Use of leverage: Hedge funds often borrow money to amplify returns—this also increases risk.
- Short selling: They can profit from falling asset prices by selling borrowed securities and buying them back later at a lower price.
- Performance-based fees: Managers typically charge a management fee (e.g., 2%) and a performance fee (e.g., 20% of profits), known as “2 and 20.”
How Do I Invest in Hedge Funds?
Investing in hedge funds is typically limited to accredited or institutional investors. To qualify, individuals generally need a net worth over $1 million (excluding their primary residence) or an annual income exceeding $200,000 for the past two years ($300,000 with a spouse). Hedge funds are not listed on public platforms, so investors usually access them through private referrals, financial advisors, wealth management firms, or fund-of-funds.
Before investing, it's important to review the fund’s strategy, risk profile, fees, manager track record, and redemption terms. Investors must also sign legal documents, such as a private placement memorandum and subscription agreement, to confirm their eligibility. Minimum investments often start at $250,000 or more, and funds typically have restrictions on when money can be withdrawn.
What Are the Benefits and Risks of Hedge Funds?
Hedge funds can offer several benefits to investors. They often aim to deliver high returns by using a wide range of investment strategies. Hedge funds are flexible in what they can invest in, including stocks, bonds, currencies, and more. Some use techniques like short selling and leverage to try to profit in both rising and falling markets. This flexibility may help investors diversify their portfolios and reduce risk when markets are unstable. Many hedge funds are also managed by experienced professionals who closely monitor the markets and adjust their strategies based on changing conditions.
However, there are also important risks to consider. Hedge funds are not as transparent as regular mutual funds, so it can be hard for investors to fully understand what they are invested in. They often charge high fees, which can eat into profits. Many hedge funds also have limits on when investors can take their money out, making them less liquid than other investments. Because they sometimes use borrowed money or complex strategies, hedge funds can also experience large losses. For these reasons, they are usually only open to wealthy or experienced investors who can afford to take on more risk.
Interactive Brokers Education and Resources for Hedge Funds
Hedge Fund Capital Introduction Program
The Hedge Fund Capital Introduction Program is an online version of a capital introduction program. Hedge Funds using IBKR as their principal prime broker can market their funds to IBKR clients who are Accredited Investors or Qualified Purchasers. In addition, the Marketplace is a great resource for IBKR clients looking to research or invest with Hedge Funds.
IBKR Podcasts
Stay up to date with financial and macroeconomic events by subscribing to the IBKR Podcast channel by Interactive Brokers. Audio market commentary draws upon an array of industry experts to get unique insight on a variety of topics and asset classes. Episodes include discussions with researchers, leading financial services companies and veterans from the financial field.
Additional Resources
Start trading like a professional today!
Open an AccountDisclosure
IRA accounts are not eligible to invest in participating Hedge Funds.
Information provided in the Hedge Fund Capital Introduction Program (including any articles or commentary posted by the hedge funds) is provided by the hedge funds themselves and not by Interactive Brokers. The information is NOT a recommendation by Interactive Brokers that you should invest in hedge funds or in these particular hedge funds.
The hedge funds are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the past or future performance of the hedge funds or the accuracy of the information provided by the hedge funds. Investing in hedge funds is risky. Interactive Brokers does not conduct any "suitability" review to make sure that any hedge fund investment is suitable for you. Past performance is no guarantee of future results.
Hedge funds are highly speculative and investors may lose their entire investment. Also, interests in hedge funds are generally not transferable and hedge funds may restrict your ability to withdraw your funds quickly. Hedge funds generally calculate the value of your investment monthly or quarterly and unlike mutual funds are not required to provide regular pricing or valuation information to investors. Hedge funds may involve complex tax structures and delays in distributing tax information to investors. Hedge funds often charge high fees.
