Reading through some of the mandates for hedge funds via Bloomberg can provide instant comedic relief…

“Its strict requirement is that funds must have at least three years of 15 percent returns. The ratio of annual returns to maximum drawdown must be at least 1.5.”

“The expected return of the manager is typically between 12 percent to 15 percent on a five year annualized basis. Managers with a maximum drawdown of 20 percent or more will be not considered.”

“Expects a return of 10 percent to 15 percent and drawdowns of no more than 5 percent to 10 percent.”

“The investor has a very “high bar” preference and seeks returns that average over 18 percent. The firm is pedigree sensitive.”

“The expected return on the long-short funds is about 10 percent to 15 percent.”

“Managers should have a strong pedigree and expect a return of at least 12 to 15 percent in the coming quarters.”

“The firm generally targets returns of 15 percent and volatility should be 7 percent.”

“Currently looking for energy hedge fund managers with net returns greater than 20 percent. Managers should have the “right pedigree” and not have a drawdown of greater than 15 percent.”

“The firm is only interested in funds that have track records between six and 18 months with Sharpe ratios of 1.25 or greater. The firm does not wish to review managers that have had drawdowns of greater than 6 percent.”

“The investor is looking for funds with a Sharpe ratio greater than 1, monthly or better liquidity and at least 15 percent annual returns.”

“Looking for managers with a Sharpe ratio of 1.5 with three-year net annualized returns of at least 10 percent.”

“The firm wants to hear from managers with annualized returns of at least 15 percent and a high pedigree.”

Hilarious, I know. There is so much good material in there I don’t even know where to begin. The hedge fund game is so simple. You just pick the funds with a “strong pedigree,” highest past returns, and lowest volatility/drawdowns. Do that and champagne riches and caviar dreams will be yours.