Benjamin Graham - The World's First Hedge Fund Manager

Content

Famed value investor Warren Buffett says that his mentor possibly created the first example of what is now known as a Hedge Fund.

What Are Hedge Funds?

A Hedge Fund is an investment fund with certain unique characteristics.

For one thing, Hedge Funds are not restricted to just stocks and bonds like mutual funds. A hedge fund can also invest in real estate, derivatives, currencies etc. Hedge Funds are also open only to investors who meet certain net worth, or annual income, requirements.

Lastly, Hedge Funds also often employ leverage and a performance-based fee structure.

Benjamin Graham

Warren Buffett says that while Alfred Winslow Jones is widely credited with creating the first Hedge Fund in the late 1940s, his mentor — Benjamin Graham — possibly created the first example of what is now known as a Hedge Fund two decades earlier.

In the 2018 Balance of Power interview for Bloomberg Markets, Warren Buffett says yet again:

"The principles [of investing] haven't changed at all... It's exactly what Ben Graham wrote in 1949."

Warren Buffett, Bloomberg Markets: Balance of Power (2018).

Link
https://www.grahamvalue.com/blog/benjamin-graham-worlds-first-hedge-fund-manager
Summary
Warren Buffett, the renowned value investor, suggests that his mentor, Benjamin Graham, may have created the first example of what is now recognized as a Hedge Fund, predating Alfred Winslow Jones, who is often credited with this innovation in the late 1940s. Hedge Funds are distinct investment vehicles that can invest in a variety of assets beyond just stocks and bonds, including real estate, derivatives, and currencies. They are typically accessible only to accredited investors who meet specific net worth or income criteria. Additionally, Hedge Funds often utilize leverage and charge performance-based fees. In a 2018 interview with Bloomberg Markets, Buffett emphasized that the core principles of investing remain unchanged since Graham's writings in 1949, highlighting the enduring relevance of Graham's investment philosophy.