hedge fund margin and IRAs

[stahleyp]

Alright so I'm kind of embarrassed I don't know the answer to this but hopefully you guys will.

 

 

As most of us know IRAs don't have margin abilities. However, if one invests in a hedge fund that's using margin, is that possible? So basically the IRA would gain margin through the hedge fund. I'm assuming the answer is yes but wasn't sure. Thanks!

[muscleman]

Alright so I'm kind of embarrassed I don't know the answer to this but hopefully you guys will.

 

 

As most of us know IRAs don't have margin abilities. However, if one invests in a hedge fund that's using margin, is that possible? So basically the IRA would gain margin through the hedge fund. I'm assuming the answer is yes but wasn't sure. Thanks!

 

I don't know the answer....

But I think you can have pseudo margin in Fido and IB's IRA accounts, which allows you to buy options and futures in a limited way.

[Lance]

Alright so I'm kind of embarrassed I don't know the answer to this but hopefully you guys will.

 

 

As most of us know IRAs don't have margin abilities. However, if one invests in a hedge fund that's using margin, is that possible? So basically the IRA would gain margin through the hedge fund. I'm assuming the answer is yes but wasn't sure. Thanks!

 

Hi - I’d assume that’s no different than buying a CEF that uses margin.

 

Thanks

Lance

[TwoCitiesCapital]

You can buy leveraged investments within the IRA, just not explicit margin at the account level.

 

As has been mentioned, investing in CEFs and buying options is allowed. I believe some places all for futures contracts as well.  I don't know how one would invest in a hedge fund via an IRA, but I imagine it's possible.

[stahleyp]

thanks guys.  Yeah, I'm familial with leveraged CEF. You could also do a leveraged ETF. The math on the leveraged ETFs don't really work out very well. They do well on a day to day basis but not longer term (taking on more risk than what you're compensated for). So you could buy CEF, leveraged ETF and a mutual fund can use limited amounts of leverage.

 

I was thinking more about buying into a hedge fund that is leveraged and if that's possible. Like I said, I believe it would be (since the others are okay) but wasn't 100% sure.

[gfp]

You can buy hedge funds, leveraged or otherwise, through a self directed IRA. You can also buy real estate and other alternative investments including certain types of precious metals investments through the self directed IRA. The self directed IRA can even take on loans to buy investment real estate as long as the debt in non-recourse beyond the property itself and the IRA balance. You can get creative through the allowed use of private loans within a self directed IRA - meaning that you can lend IRA money privately - but you cannot invest or lend in anything that directly benefits the IRA holder, as in a back door way to spend IRA money for personal consumption/enjoyment. You can, however, take joy in your investment real estate and you are permitted to feel joyful towards your portfolio of private lending..

[stahleyp]

You can buy hedge funds, leveraged or otherwise, through a self directed IRA. You can also buy real estate and other alternative investments including certain types of precious metals investments through the self directed IRA. The self directed IRA can even take on loans to buy investment real estate as long as the debt in non-recourse beyond the property itself and the IRA balance. You can get creative through the allowed use of private loans within a self directed IRA - meaning that you can lend IRA money privately - but you cannot invest or lend in anything that directly benefits the IRA holder, as in a back door way to spend IRA money for personal consumption/enjoyment. You can, however, take joy in your investment real estate and you are permitted to feel joyful towards your portfolio of private lending..

 

gfp that is very helpful. Thanks! :)