Question

Explain hedge funds

Answer 1

Hedge funds are pooled investment funds that takes money from high networth individuals and will take highly risky positions to earn higher returns. It can invest in wide range of instruments like real estate, equities, bonds derivatives, currencies, and other alternative assets. These are less regulated because the investors are being very wealthy. One more thing positive thing is that income from these funds is taxable at the investment fund level. Hence, the tax obligation will not passto the investors.

Hedge fund charges both expense ratio and management fee. It ranges around 2% of expense ratio and some where around 15-20% of management on profits.