A hedge fund is a form of alternative investment that pools capital from individual or institutional investors to invest in varied assets, often relying on complex techniques to build its portfolio and manage risk. Hedge funds can invest in anything from real estate to currencies and other alternative assets; this is one of many ways in which hedge funds differ from mutual funds, which normally only invest in stocks or bonds. The aim of all hedge funds is to maximise investor returns and eliminate risk, regardless of whether the market is going up or down. Today, hedge funds have several trillion dollars are under management.
Hedge funds are actively managed investment pools whose managers use a wide range of strategies, often including buying with borrowed money and trading esoteric assets, in an effort to beat average investment returns for their clients. They are considered risky alternative investment choices.
With government restrictions and pricey buy-ins, hedge funds are all but inaccessible to most mere investing mortals. Hedge funds take on these riskier strategies to produce returns regardless of market conditions. This tactic appeals to investors looking to continue to earn returns even in bear markets. Minimum initial investment amounts for hedge funds range from $100,000 to upwards of $2 million. Hedge funds are not as liquid as stocks or bonds either and may only allow you to withdraw your money after you’ve been invested for a certain amount of time or during set times of the year.
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