What Is an Offshore Hedge Fund?
Funds that use hedging methods are called hedge funds, also known as hedge funds or hedge funds.
Hedge Fund
(Financial market participants)
- To protect investors, North American
- It's unclear which earliest hedge funds were. During the great bull market of the United States in the 1920s, there were countless such investment tools designed specifically for the rich. The most famous of these is the Graham-Newman Partnership fund founded by Benjamin Graham and Jerry Newman.
- The 1923 novel "Memoirs of the Stock Market" described Jesse Livermore's brilliant achievements, describing a kind of work called "
- Hedging is an act or strategy designed to reduce risk.
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- At present, the domestic cost market
- 1. Arbitrage strategy: the most traditional hedging strategy
- 2. Index-enhanced portfolio + index futures short-rolling year Alpha distribution, based on statistical performance of arbitrage performance of 90 portfolios
- 3. Alpha strategy: change relative returns to absolute returns
- 4. Neutral strategy: Starting from the dimension of eliminating Beta
Hedge fund investors
- Hedge fund investors have strict qualification restrictions. U.S. securities laws require that: if you participate as an individual, your annual income should be at least $ 200,000 in two years; if you participate as a family, the couple's income in the last two years should be at least 300,000. Above USD; if participating in the name of the institution, the net asset is at least USD 1 million. New regulations were made in 1996: the number of participants increased from 100 to 500. Participants' condition is that individuals must have investment securities worth more than $ 5 million. This is not the case for general mutual funds.
Hedge Fund Operations
- Hedge funds operate without restrictions, with limited investment portfolios and transactions. Lead partners and managers are free to use a variety of investment technologies, including short selling. Derivative trading and leverage. The general mutual funds are more restricted in operation.
Hedge Fund Regulation
- Hedge funds are not regulated. The United States Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940 previously stipulated that institutions with less than 100 investors do not need to register with financial authorities such as the Securities and Exchange Commission when they are established and are exempt from regulation. Because investors are mainly a few very experienced and wealthy individuals, they have a strong ability to protect themselves.
- In contrast, the supervision of mutual funds is more stringent. This is mainly because investors are ordinary people. Many people lack the necessary understanding of the market. In order to avoid public risks, protect the weak and ensure social security, strict supervision is implemented. .
Hedge fund financing
- Hedge funds are generally initiated through private placements, and securities laws require that they not use any media to advertise when attracting customers. Investors mainly participate in four ways: according to the so-called "reliable investment news" obtained in high society; directly know the manager of a hedge fund; transfer in through other funds; and investment banks. Special introduction of securities intermediary company or investment consulting company. In general, mutual funds are mostly publicly advertised to entertain customers.
Hedge funds set up offshore
- Hedge funds usually set up offshore funds, which has the advantage of avoiding the number of investors and tax avoidance in US law. Tax shelters such as British Virgin Islands, Bahamas, Bermuda, Cayman Islands, Dublin and Luxembourg where taxation is minimal .
- Of the $ 68 billion hedge funds counted in November 1996, $ 31.7 billion was invested in offshore hedge funds. According to statistics, if the "fund of funds" is not included, the assets under management of offshore funds are almost twice that of onshore funds. And common mutual funds cannot be set up offshore.
- So ordinary funds can also hedge, but there are many restrictions.
- In China, because there is no public fund to buy and sell futures and foreign exchange, there are no financial products that can be sold short, so hedging cannot be performed.
Hedge Fund Domestic System
- In order to classify domestic hedge funds more accurately, Shenzhen CICC Alpha Investment Research Co., Ltd. refers to the internationally renowned hedge fund classification standards, combines the current status and trends of the domestic industry, and classifies fund strategies, issuance channels, investment categories, and implementation. The method classification is divided into four different dimensions to form a "hedge fund index and rating system based on strategy classification".
- Hedge Fund Madman
Hedge Fund Strategy Classification
- Main strategies: directional strategies (including long and short positions in stocks, macro, managed futures, fixed income); relative value strategies (including convertible bond arbitrage, fixed income arbitrage, futures arbitrage, index arbitrage, stock market neutral, structured product arbitrage , Asset securitization product arbitrage, statistical arbitrage); event-driven strategies (including mergers and reorganizations, distressed securities, private placements, block transactions); fund strategy
- Hedge Fund
- Limited partnership trust (structured, unstructured) special account wealth management bank wealth management overseas fund
- Classification of investment varieties
- Bonds and fixed income futures, options and commodities stocks, margin financing and margin trading, credit derivatives, asset securitization products, structured products
- Classification by implementation
- Subjective trading