 |
| Image: Moneybestpal.com |
Hedge funds are private investment funds with the objective of generating high returns through a variety of investing strategies, including active management and risk-taking. These funds pool cash from accredited individuals or institutional investors.Â
Hedge funds, as contrast to mutual funds, typically only accept a smaller number of investors and frequently have higher minimum investment requirements.
In order to achieve large returns, hedge funds are renowned for using sophisticated investment techniques like short selling, leverage, and derivatives. Because these tactics include taking on a sizable degree of risk, hedge funds are often only accessible to investors who can afford to take on such risks.
With the fund manager serving as the general partner and the investors serving as the limited partners, hedge funds are typically set up as limited partnerships. While the investors contribute funds and split in the fund's gains or losses, the fund manager is in charge of selecting investments and overseeing the portfolio.
Concerns about the possible influence of hedge funds on financial stability have arisen since they are less regulated than other types of investment firms. Despite this, hedge funds remain a well-liked investment choice for affluent people and institutional investors looking for big returns.
In order to achieve large returns, hedge funds are renowned for using sophisticated investment techniques like short selling, leverage, and derivatives. Because these tactics include taking on a sizable degree of risk, hedge funds are often only accessible to investors who can afford to take on such risks.
With the fund manager serving as the general partner and the investors serving as the limited partners, hedge funds are typically set up as limited partnerships. While the investors contribute funds and split in the fund's gains or losses, the fund manager is in charge of selecting investments and overseeing the portfolio.
Concerns about the possible influence of hedge funds on financial stability have arisen since they are less regulated than other types of investment firms. Despite this, hedge funds remain a well-liked investment choice for affluent people and institutional investors looking for big returns.
