•  Venture
  •  Income Share Agreements
  •  Litigation Finance
  •  Fine Wine & Spirits
  •  Real Estate
  •  Art & Collectibles

Hedonova Review

Hedonova is a low-minimum hedge fund that invests in a portfolio of alternative asset classes like art, wine, “unicorn” startups, equipment finance, litigation finance among others. The fund says they earn returns from increases in the value of its holdings and well as from cash flow from investments like real estate and P2P lending.

Hedonova

  • Founded: 2020
  • Investment Types: Real Estate, Art & Collectibles, Venture, Litigation Finance, Income Share Agreements, and Fine Wine & Spirits
  • Minimum Investment: $5,000
  • Advertised Returns: 20-25%
  • Must be accredited
 Pros
  • Easy diversification across multiple alternative asset classes
  • Surprisingly flexible liquidity options
 Cons
  • Only open to accredited investors
  • Short track record
  • Sparse public information about executives
  • Needs high performance to offset fees

Overview

This Hedonova Review will help you learn more about Hedonova's investment offerings, including how the alternative investments on Hedonova are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

Hedonova is a hedge fund founded in 2020 with a team that includes alumni of equities trading and M&A at UBS and Morgan Stanley, though there is very limited public information available about that team. They say they have been investing using their own funds since inception, and have now opened up to accredited investors.

Is Hedonova legit?

Yes, Hedonova is “legit” in the sense that it is a legitimate hedge fund (registered in Delaware). That said, there are some red flags when looking more closely at Hedonova. For example, the LinkedIn profiles for multiple executives appear to use stock images or images taken from other websites, and answers posted by the CEO on Quora are copied verbatim from other sources. You can read more in this blog post.

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Types of investments Hedonova offers

Hedonova invests in a wide range of alternative assets. Some of the assets in their current portfolio includes investments in:

  • Wine
  • Collectibles
  • Litigation Finance
  • Startups
  • Cryptocurrencies
  • Equipment finance
  • Art
  • P2P lending
  • Student income-share agreements

Hedonova’s model is similar to a “fund-of-funds” offering investors a broad exposure to multiple underlying investment types at a significantly lower investment amount than would be needed to invest individually in all of those same investments.

Many of Hedonova’s investments are made through the alternative investment platforms we review here at YieldTalk.

What do you get when investing with Hedonova?

When you invest with Hedonova, you receive membership interests in a special-purpose entity, in this case a Delaware LLC. Hedonova refers to these a “blocks”, and they are similar to units in mutual funds.

Hedonova updates the Net Asset Value (NAV) – the current price of each block – every day at 6 AM GMT.

How does Hedonova make money?

Hedonova has a “1 and 10” model of charging a 1% annual fee along with a 10% performance fee on any gains earned by the fund. That is lower than the “2 and 20” common with most hedge funds. Prospective investors should be aware that these fees are in addition to any fees associated with the underlying investments.

To offset their own performance fees, Hedonova says they actively negotiate lower fees and other favorable terms with the investment platforms whenever possible.

Potential returns and cashflow

Hedonova claims a net return of 63% as of this writing (and kudos to Hedonova for publishing detailed performance data), with a target return of 20-25%. Prospective investors should know that Hedonova has only been around since 2020, and there is minimal information available online about key executives and their past performance.

There is no ongoing cash flow when you invest with Hedonova. While some of the underlying investments (for example, real estate or student income share agreements) may include regular cash flow, that income is reinvested into other investments by Hedonova.

Investors who want to redeem their shares can do so with 30 days notice, subject to certain limitations. According to Hedonova, they keep approximately 35% of their portfolio in relatively liquid assets like listed stocks and cryptocurrencies to preserve enough liquidity for redemptions. It’s unclear whether this redemption policy can scale in the long term, but it is quite generous relative to other investment funds.

Breadth of offerings on Hedonova

There is only one investment option with Hedonova, which is their investment fund. As of this writing, Hedonova invests across 12 asset classes, and expects to add additional ones over time.

According to Hedonova, their overall strategy for selecting new investments starts by identifying a new asset class that is attracting substantial capital, selecting firms with offerings that fit Hedonova’s preferred models (eg, equity investments or income sharing), and then performing detailed due diligence on those firms.

After negotiating favorable terms, Hedonova says they typically start with a 0.2% allocation of the fund into the new asset class.

Regulatory framework and due diligence expectations

Hedonova offers investments only to accredited investors, under SEC Reg D. They are not a registered broker-dealer or investment advisor.

This review was first published on 11 October 2021, and last updated on 11 June 2022.


Our Rating

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