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S V Capital Advisors, LLC |
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....maximizing returns on alphas.... ::::About Us::::Hedge Funds::::Portfolio::::BRIC Investments::::Markets::::Team::::Contact Us:::: |
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Hedge Funds |
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Introduction A hedge fund is a lightly regulated private investment fund. The term "Hedge Fund" is not a specific legal one but is used to distinguish lightly regulated funds generally open to only a limited number of investors, from retail investment funds, which are widely available to the general public and which tend to be referred to as Mutual Funds. Where Mutual Funds may be limited to being "long" the market by buying instruments such as bonds, equities or money market instruments, and may have a limited ability to enter into derivative contracts, hedge funds do not suffer such regulatory restrictions, and are limited only by the terms of the contracts governing the particular fund. Depending on their "investment guidelines" and the "style" of the fund, hedge funds may be long or short the market and may enter into futures, swaps and other derivative contracts. In this way, hedge funds are able to create more complex investment strategies which may, for example, profit in times of market volatility, or even in a falling market. Because of usual limits on investor numbers of minimum investment amounts, Hedge funds are normally open only to professional, institutional or otherwise accredited investors. Comparison to U.S. Mutual FundsLike hedge funds, mutual funds are pools of investment capital. However, the two structures have several differences, including:
Additionally, mutual funds must have a prospectus available to anyone that requests them (either electronically or via US postal mail), and must disclose their asset allocation quarterly, while hedge funds do not have to abide by these terms. Hedge funds also frequently do not have daily liquidity, but rather "lock up" periods of time where the total returns are generated (net of fees) for their investors and then returned when the term ends, through a pass through requiring CPAs and US Tax W-forms. Lots of people tolerate the nature of hedge funds over mutual funds because they usually generate higher total returns for their investors versus mutual funds |
Key Features
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