Hedge Funds - Essay Example

Extract of sample
Hedge Funds

Most of the hedge funds are devised in such a manner that they are able to generate return for the investors with the rate of return that is generally more than the market return and even in times when the market is not performing well due to recession or some other reason. However, a retail investor cannot invest in the hedge fund the same way as he would have done it for stocks or mutual funds. The operations of these funds fall beyond the control of any government regulation and hence it is mainly at the fund manager’s discretion that the investment portfolio would be designed, what strategies would be employed and which stocks are to be included. The main motive behind devising such a fund was to secure the funds from the market risk and to earn more return. Hedge Fund Management and Skill The management of this kind of investment product requires a lot of skill. The fund managers need to have an insight about the market and the various risk management strategies that can help the managers to cover the fund against probable losses and gain profits out of those risky situations. The managers and the investors of these kinds of funds need to be aware of the types of investment risks that they may come across. Since higher the risk taken higher is the possibility of return, the hedge funds often attempt at taking risks that may not be beneficial for the investors. ...Show more

Summary

Hedge Funds Introduction Hedge Funds are a particular kind for investment instruments in the form of collective investment in which the investors may invest capital in a speculatively manner in order to get more return than what the markets would otherwise offer…
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