Hedge Fund Investments

by admin on July 5, 2012

Although they are a popular financial vehicle, a lot of minor investors do not have much of an idea about what hedge funds are. Hedge funds are investment funds that are limited by the type of investor rather than the range of investments and trading activities. This could be a pension fund, or an endowment, or even a partnership with a limited number of investors. Because hedge fund trading is therefore less public, the regulations on trading are decreased, and this generally leads to a wider range of investment activities. They are similar in some ways to mutual funds, but the range of possible financial investments they can make even greater.
The returns for hedge funds can be difficult to compare with those of more standard investment vehicles. Because of the individual nature of each fund, general like-for-like comparisons are almost meaningless. Statistical analysis can reveal more, but in general only hindsight reveals the full nature of a hedge fund’s success. Unlike mutual firms, hedge funds sometimes have no liquidity requirements, and do not always have to report Net Asset Value on a regular basis, making the information for assessment of an individual fund difficult to acquire.
Proper advice and management are key to successful hedge funds, and a number of companies have grown up to support this. Most firms of this type are keen to expand their client base, and well-established companies such as BlackRock, Soros Fund Management, Bridgewater Associates and Eden Rock Capital Management are keen to attract attention from appropriate new clients.
The EU’s Directive on Alternative Investment Fund Managers, due to be enforced in 2013, will provide more security and information for investors, though hedge funds are likely to remain relatively opaque investment vehicles.

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