Monday, August 14, 2006
What is a hedge fund?
The two defining features of a hedge fund are leverage and short selling. While traditional funds managers may also leverage and short sell they are generally conducted more extensively by hedge funds. There are other differences like fees, transparency of process and regulation which I will address in later posts.
Subscribe to:
Post Comments (Atom)
4 comments:
Ok, I hear what you're saying. So why should I consider investing in hedge funds as opposed to mutual funds?
Most people will want returns because they will be paying higher fees than for mutual funds.
Returns? I have been invested in Australian mining & energy stocks over the last 5 years and made some great returns. Why would I consider investing in a hedge fund that has earned less than my stock investments?
What comes in with the tide goes out with the tide. The things about hedge funds, if they are managed true to label, is that their returns don't correlate with market returns. Hopefully you avoid the big cyclical downdrafts that inevitably follow the big cyclical upswings.
Post a Comment