Hedge Fund Reader : What are hedge funds?

March 15, 2006

What are hedge funds?

Well if you have had some interest in the financial market, then you sure must have come across the term “hedge fund”. This term is most commonly used to describe a variety of investment vehicles that share similar characteristics. Even though the term is not statutorily defined, it mainly encompasses any pooled investment vehicle that is privately organized, administered by professional investment managers, and not really open to the public at large – or so to say not usually available for retail small time investors.

Thus the next question that we expect from you while reading this piece is that if it is not open to retail investors – then for whom is it open. Well the answer to this query is that hedge funds as a class of investment vehicles are primary open to wealthy individuals and institutional investors. Also, hedge fund managers frequently have a stake in the funds they manage. In reference to hedge funds’ structure, entities are organized as limited partnerships or limited liability companies, and in many cases are domiciled outside the United States.

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March 15, 2006 in Emerging Markets | Permalink