Managed funds that pool money from investors and invest in securities within multiple complex strategies in an effort to reduce risk and maximize returns.
- more aggressive and exclusive and mutual funds
- not regulated heavily as mutual funds, so more return and risk
- charge both a management fee and a performance fee
- most common fee structure: two and twenty → 2% aset management fee and a 20% cut of generated gains
Strategies
- seeks profit in all kinds of markets
- investment strategies not used my mutual funds such as:
- leverage → borrowing to increase investment exposure as well as risk
- shorting → betting against the market
Who can invest in hedge funds?
- you must be an accredited investor
- like institutional investors (like pension funds and insurance companies), or individuals with a high net of over $1 million lol