![]() ![]() It can range from 15% to 20% of your returns. Hence, the expense ratio (fee to the fund manager) is way more for hedge funds than regular mutual funds. You not only have to be someone with surplus funds, but also an aggressive risk-seeker, this is because the manager buys and sells assets at dizzying speed to keep up with the market movements.Īs you know, higher the structural complexity, more the risks. Hence, they are affordable and feasible only for the financially well-off. For this reason, they tend to be a bit on the costlier side. Hedge funds are mutual funds that are privately managed by experts. They hold both long and short positions, including positions in listed and unlisted derivatives. ![]() Unlike the typical equity mutual fund, they tend to employ substantial leverage. As a collection of assets that strives to ‘hedge’ risks to investor’s money against market ups and downs, they need aggressive management. Hence, they are also considered as alternative investments. They do not need to be registered with SEBI, nor do they need to disclose their NAV periodically like other mutual funds.Ī hedge fund portfolio consists of asset classes such as derivatives, equities, bonds, currencies, and convertible securities. ![]() This is the reason why these funds often function as overseas investment corporations or private investment partnerships. A hedge fund uses the funds collected from accredited investors like banks, insurance firms, High Net-Worth Individuals (HNIs) & families, and endowments and pension funds. To hedge means to safeguard, and in the context of investing, it means to protect against risks. ![]()
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