Who Invests in Hedge Funds?
Q & A: Who Can Invest in Hedge Funds?
"Sophisticated investors" invest in hedge funds. These investors do not need the protection that comes with the regulations on mutual funds. These wealthy individuals must pass either an accredited investor test or a qualified purchaser test.
An Accredited Investor is an individual who either:
a.) has a net worth greater than $1 million.
b.) has an income in the past two years that exceeds $200,000/year, and expects to continue this way.
or c.) holds assets greater than $5 million.
A Qualified Purchaser is either:
a.) an individual that owns at least $5 million in investments.
b.) a family-held business that owns at least $5 million in investments.
c.) a business that has discretion of at least $25 million in investments.
d.) a trust that is sponsored by qualified purchasers.
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