This lecture discusses hedge funds, differences between mutual funds and hedge funds, hedge fund strategies, benefits, and risks of hedge funds. Hedge funds are pooled investments which are typically targeted towards high net-worth individuals [ family income more than ~$250k ]. Management fees is usually higher for hedge funds than mutual funds which are targeted towards everyone. There are major differences in both kinds of investment vehicles in terms of setting up, charges, and returns. In last many years hedge funds have proven themselves to be better than mutual funds with typical returns in the range of 25% to 35% as compared to mutual funds return of 5% to 7%. Also, government regulations are loose for hedge funds. It totally make sense towards hedge-funds investments. However these are riskier funds which typically do not disclose their investment strategies to investors. One just goes with the trust on hedge fund manager. It becomes quite important to look for hedge fund manager’s track-record, honesty and integrity before investing in hedge funds. There are thousands of hedge funds around the world. One needs to do due diligence before investing in hedge funds.
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