Investment: Hedge Funds
Similar to mutual funds, hedge funds combine investors’ money to invest to return a profit. Hedge funds try to evade down turns in the market. Unlike mutual funds, these are extremely risky, unregulated and privately operated. Oftentimes they use speculative practices like leveraging. As of 2004, only SOME hedge fund managers are required to register with the SEC. If a hedge fund manager is registered, only a small amount of information has to be shared with the SEC.
Most hedge funds require a $1 million minimum to join and are limited to 499 Limited Partners that can invest in one fund. The portfolio manager collects 1-2% of the investor’s assets plus around 20% of the profits. Investors should with caution as many hedge funds only allow quarterly or yearly selling, meaning the investor could be trapped in the fund when the market turns.
All examples are for educational purposes only, and should NOT be construed as investment advice. Always contact a qualified tax attorney or advisor prior to making any financial decision.
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