Thursday, May 20, 2010

Hedge Fund


An Aggressive managed portfolio that use advanced I investment strategy to get more return than the general investment are called hedge fund investment .Hedge means the protection ,hedge investment help to get the shelter from the current market fall. Hedge investment or the hedge is give birth to the FRA (Future rate of agreement).FRA is the policy to transfer the agreement to the future to get the advantage of the general rise of the interest rate .Hedge funds investment is generally differ from the mutual fund investment as the mutual fund investment need to follow some rules and guideline for investment but the hedge fund are free from any rules and regulation for the investment. Hedge fund investment generally for the rich people as the investment are highly risk able .In the US there is a criteria for hedge investment that the investor has at least 1 million net worth of assets .Hedge fund generally need to protect the risk of interest but actually this means of investment for getting higher return .
Magegment fees are calculated on the NAV of the fund on the per annum basis but paid on the monthly or quarter basis and charged as 1% to 4 %.
Performance fees are charges on the net profit of the fund investment as there is no profit no need to pay the charges.
Main Risk:
Volatility: Hedge fund are highly elastic than other investment.
Lack of transparency: Hedge funds not follow the rules and regulation there for there is no governing body to check the performance of the hedge fund which means transparency of the investment is very low.
Lack of regulation: There are no specific rules or regulation for the hedge fund investment as a result the hedge fund manager decision is the last decision for the investment.



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