What Are Hedge Funds?

What Are Hedge Funds?

What Are Hedge Funds?I get a lot of questions such as What Are Hedge Funds? What do hedge funds invest in? or most often, Will A Hedge Fund Invest in My Company? Here is my answer to "What are Hedge Funds?"

A hedge fund is a private investment pool of capital which has few restrictions in what types of assets it can invest in. Hedge funds are often ran by a small team of experienced portfolio managers, traders and analysts. Hedge funds earn money by typically charging investors a 2% management fee plus 20% of positive returns past a set point which is often referred to as a hurdle rate. While the hedge funds you often here about in mainstream media are very large with over $10B in assets they represent only .5% of the total universe of well over 12,000 hedge funds. Here is a video on what is a hedge fund: http://richard-wilson.blogspot.com/2007/11/what-is-hedge-fund.html

- Richard

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