In this post we are going to see what is a "Hedge Funds" in Investors world, and how it is differ from other Fund systems.
Hedge Funds are the normally named as “Alternative Investments” using pooled Funds. Hedge Funds
uses different strategies to yield a “Active Return” or “Absolute Return” for their investors.
Hedge Fund are usually used by Wealthy individuals or Institutions, They used a aggressive strategies
that are unavailable in Mutual Funds including Selling Shot, Leverage, Trading, arbitrage and derivatives
Hedge Funds are restricted by law No more than 100 or 500 investors by Fund.
Hedge Funds are the funds where highly wealthy people are allowed to invest, they are consider as
investors because each and every investments are in 1 Million $. Each hedge fund follows a strategy is
Constructed to take advantage of certain identifiable market opportunities. Hedge funds use different
investment strategies and thus are often classified according to investment style.
There is substantial diversity in risk attributes and investment opportunities among styles, which
reflects the flexibility of the hedge fund format. In general, this diversity benefits investors by increasing
the range of choices among investment attributes.
Hedge Funds main target is generating positive returns in Both up and Down markets. Through out the
time investors are looking for ways to maximize the profit and minimizing the Risks. Shielding an
investment from market risk through a alternate investment is called as “Hedge Funds”.
Always Absolute return is the term is used along with Hedge Funds, this describes that there will be a
active return will be for investors in Good and Bad markets.
“More sophisticated individuals or institutions are the investors in these kind of Hedge Funds”, A
investor must pass an “Accredited investor test or qualifier purchase test“ whose net worth exceeds 1$
million or whose income in the last year $200,000 , there also another entity asses exceeds 5$ Million.
Hedge Funds rely on sections 3 (c)(1), and 3 (c)(7) of the investment company act of 1940 ,
Hedge funds are prohibited from advertising there funds from Public.
Hedge Fund Managers are applying strategies , they will add alpha , they will use there skill to solve
the inefficiency in the market. Hedge Funds concentrate on the Active or absolute returns for their
investors
Hedge Funds try to protect their investors in the downside of the market , an Hedge Funds portfolio
have lot of investments where investors can choose there hedge funds based on the sophistication
From this post you can learn some basic information about the Hedge Funds and there advantages
to the investors