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Beneficial Hedge Fund Strategies

Beneficial Hedge Fund Strategies
March 30
09:49 2012

 

 

There are numerous hedge fund strategies to choose from. These particular funds are known for putting money in many different investments. In many instances you can achieve a higher return on investment with these funds than you could by using a standard mutual fund.

What They Invest In

These funds place money in various investments. In the stock market only they utilize a variety of hedge fund strategies for investing. As an example, they will buy and hold stocks, sell them short, and buy options.

On the other hand, they are not restricted to the stock market. Some hedge funds place funds in property, foreign currencies and bonds. It actually depends on the specific fund.

Fees

With hedge funds, you will need to pay back a performance fee and in addition a management fee, if it does well. This fee is paid to the fund manager, who is the one who decides what to invest in.

Return On Investment

The average return on investment is different from one year to another. It actually is dependent on the market sector they put funds in, and exactly how the overall economy is doing. It’s feasible to realize a double digit return on investment some years, but for other years you will probably make no greater than a typical government bond.

Who can Make Investments In Them

You have to be accredited to put money in a hedge fund. They have a tendency only to accept investments from major organizations such as financial institutions and companies having a lot of money available.

How You Can Pick The Appropriate Fund

If you’re approved, then focus on funds that have obtained a high return on investment for many years. The previous performance of a fund indicates it is likely to increase in the coming years. If it has not done very well in prior years, that is a warning signal that you really should keep away. If you do nothing but examine the previous performance, you will still probably see good results.

How You Can Take Advantage Of These Funds Without Investing in Them

The reality is that most people are not able to put money in hedge funds, simply because they aren’t approved investors. However, that doesn’t signify they cannot make use of these funds. Keep in mind, these particular funds are sometimes worth many millions of dollars.

Quite simply, when they make investments in something, it tends to make the price of that particular investment go up. As a result, buying a stock right before a major fund can mean huge returns on investment. Of course, it is very difficult to know exactly where they are going to put their money, so you need to be a savvy investor and monitor specific market indicators in order to predict this. So far as hedge fund strategies go, this can be a worthwhile one.

Are you looking for information on the best hedge fund managers? Be sure to visit Insider Monkey for information on Oaktree Capital and Paul Tudor Jones.

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