What is the hedge fund?
Hedge Fund is a type of investment portfolio that includes a number of investment products and strategies. The fund can be managed by an investor that has created or can be created in the form of a society such as a limited liability company (LLC). This last option creates a warranty if the company failed; The creditors cannot go for investors for more money than they put in the fund. Investors put money into the fund and the manager receives a part of the profits that the fund earns; Profit profits in the hedge fund rely on the selection of the relevant shares and are at the best time.
The term hedge fund comes from the phrase "to ensure bets" and refers to the practice of balance of transactions to ensure that no matter how the market turns. It is these compensatory transactions that distinguish hedge funds from a number of other funds that climbed at the beginning of the 21st. Tent.
DevelopmentHedge Funds
The first hedge fund was created in 1949 by a pioneer of Alfred Winslow Jones shares. Originally, the Hedge Fund was basically intended as a fund that sold some shares briefly and bought more shares. Short purchase of shares includes the sale of borrowed shares with the hope that they will buy them back at a lower price, while buying shares long means buying shares that are expected to increase value and sell them as soon as they do. With this technique, the overall value of purchasing and sales of balances is to eliminate heavy losses due to major fluctuations in the market. The term hedge fund is now largely concerned with any fund, which is mostly unregulated and uses unconventional investment methods, and most Hedge funds have a partnership status, not on the company model of other funds.
Investment strategy
Hedge funds have evocally balanced short -term strategies of Alfred Jones to include a number of strategies. The common Hedge fund strategies include: tradingWith options and bonds, buying or selling highly undervalued securities and arbitration. Another common strategy is called the Arbitrage Risk and includes the purchase of shares in a company that is in the middle of the merger and acquisition - in this case there is a guaranteed profit if it completes the merger, the only risk is that the acquisition fails.
regulations
In order to maintain the regulation very low, hedge funds have status of unregistered investment companies. This means that only accredited investors and qualified buyers can invest in them - those who have more than $ 200,000 per year, net cost of more than $ 1 million or those who already have at least $ 5 million in investment.
Unlike mutual funds, hedge funds are very easily regulated; As a result, they can maintain relatively secret themselves. Most current locking funds are processed by offshore companies in places such as the virgin islands or the Cayman Islands where the M is regulationincimal. This secrecy makes it difficult to predict actual numbers for hedge funds, but since January 2011, assets were $ 1.9 trillion (USD) under the administration of securing funds.