![]() ![]() It can also be an entity with assets exceeding $5 million.Ī qualified purchaser is someone with over $5 million who invests in total assets, or one of a number of entities. An accredited investor is an individual whose net worth exceeds $1 million, or whose income in the last 2 calendar years exceeds $200,000/yr, and who expects more of the same. ![]() These are entities, or wealthy individuals that must pass either an “accredited investor” test or a “qualified purchaser” test. “Sophisticated investors” do – those who do not need the protection provided by the regulations that apply to mutual funds. You may hear the term “absolute return” used in conjunction with hedge funds, this describes how investment strategies are designed to generate returns in both good markets and bad. Perhaps the widest definition of a hedge fund is an alternative investment portfolio used by a group looking for above market returns. To simplify the definition of a hedge fund, you have to look at the investor’s objectives, classification and look at hedge fund strategies typically used by the fund manager. These alternative investments are called hedge funds. The issue of shielding an investment from market risk is attempted (although not always successful) with alternative investments that try to mitigate loss and preserve capital. Throughout time investors have looked for ways to maximize profits while minimizing risk. A simple hedge fund definition is: a hedge fund is an alternative investment that is designed to protect investment portfolios from market uncertainty, while generating positive returns in both up and down markets.
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