Hedge Fund Basics
Hedge funds were once only available to the super rich. Now the middle class plays a huge role in $1-trillion industry1 by investing through mutual funds and pension plans. A hedge fund is typically a private investment that seeks above-average returns. Skilled traders and brokers obtain returns through skill-based investment strategies.Hedge Fund Benefits
Investing in hedge funds provides the following benefits:
- Hedge funds can deliver positive returns under almost all market conditions.
- Investors who choose to invest in hedge funds have access to specialized strategies not typically available through traditional investing.
- There are extensive risk-management techniques put in place to protect investors.
- Hedge funds have a lock-up period during which an investor cannot remove his investment.
- Hedge funds are a high risk investment. There is a chance you could lose the bulk of your investment.
- Due to complex tax structure for hedge funds, many investors may experience a delay in receiving important tax information.
- Hedge funds have very few disclosure regulations which means you may not get the in-depth information you are looking for. Sometimes underlying investments will only be known to the investment manager.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.