Hedge Funds: All You Need To Know Since the start of the 21st century, the use of hedge funds in financial portfolios has grown exponentially. The hedge fund is a fancy name given to an investment partnership that has the advantage to rein freely and can be invested aggressively in numerous types of financial products than the usual mutual funds.
It can be understood in simple terms as the marriage of the investor who may be called the limited partner, with a professional fund manager who is sometimes also known as the general partner.
Partnerships: Hedge Funds Jaian Cuttari believes that the purpose of a hedge fund is to maximize the returns and eliminate risk for the investor. From a bird's eye view, they may seem very similar to mutual funds, but they are not actually. Hedge funds are generally considered to be more exclusive, aggressive, and riskier than mutual funds. In a hedge fund, The general partners manage the funds according to the desired strategy whereas the limited partners contribute funding for the assets. Together, they pool the desired sum of money into these funds.
Hedge Funds: Advantages These funds have some advantages over traditional investments like –
Increased returns. Even amid rising and falling equity and bond markets investment strategies can generate positive returns in both. Reduces the overall portfolio volatility and risk in balanced portfolios. The presence of a variety of investment techniques can provide the investors with the ability to fully customize an investment strategy In hedge funds, one can get access to the world's most talented investment managers
Hedge Funds: All You Need To Know
Final words According to expert Jaian Cuttari, a hedge fund can be referred to as an official partnership of investors who come together and pool their money together and are guided by professional management firms—just like in the case of mutual funds. They have a much higher threshold for minimum investment