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January 10, 2006
Hedge funds accessible for medium income investors in Europe
According to recent reports, hedge funds in Europe would now be available for people falling in the medium income strata as well. In Germany, investors can purchase hedge funds from Deutsche Bank AG for as little as 124 euros, that is $150. Regulators in UK and Spain are also considering opening the industry to more individual investment.
Investors need to know that hedge funds usually tend to take larger bets than conventional funds and aim to make money even in falling markets. According to Chicago based Hedge Fund Research Inc., hedge funds worldwide have more than doubled their assets since 2000 to about $1.1 trillion. Also, for Europeans, hedge fund investments may lift returns. Over a period of five years, ending last November, the CSFB Tremont Hedge Fund Index advanced 48 per cent, compared with a 2.4 per cent return for the MSCI World Index during the same period.
At the same time, investors need to exercise caution as these funds can be risky. The Bailey Coates Cromwell Fund, London, that had about $1.3 billion at its peak, closed in June after losing 20 per cent of its value.
It is advisable for new investors to study the market in detail before capitalizing on the opportunity now available to invest in hedge funds. New investors
At the same time, caution has to be exercised, as these funds can also be risky. The London-based Bailey Coates Cromwell fund, which had about $1.3 billion at its peak, closed in June after losing 20 percent of its value.
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