Tuesday 10 April 2018

What are the Main Characteristics of Hedge Fund?

hedge fund in India
The use of hedge funds in personal financial collections has dramatically increased since the beginning of the 21st century. Basically, the hedge fund is a fancy name for an investment partnership. It’s related to a professional fund manager and the investors, who pool their money together into the fund. In hedge fund in India, the investors contribute funding for the assets and the professional fund manager manages it according to the fund’s strategy.

The Purpose

The purpose of the hedge fund in India is to maximize investor returns and remove risks. If the structure and objective of the fund sound similar to the mutual fund, you may call it that, but that is where the connection between the two ends. Generally, these funds are considered riskier, more aggressive and exclusive than the mutual funds. They are expected to make money irrespective of the market trends. A hedge fund management team resembles traders more than the classic investors. In fact, some mutual funds utilize these types of techniques more than others.

Key Characteristics of Hedge Fund
  • It is only open to accredited investors. The investors in the hedge funds have to meet up with specific net worth requirements, which may generally exceed $1 million.
  • The investment universe of a hedge fund is only limited by its consent. It can basically invest in anything from real estate, land, currencies, derivatives or some other alternative assets. In contrast, mutual funds usually have to stick to bonds.
  • These funds will often use borrowed money to intensify the returns that can potentially expose them to a wider range of investment risks.