Investment in hedge funds

Hedge funds investment

Hedge funds are a specific type of investment fund. They can generate profits not only at a time when stock exchanges are growing, but also when they are falling. The performance of hedge funds usually does not match stock market performance. They do not usually invest in equities themselves, but in equity derivatives or other strategies based on automated investment systems, where the computer often analyzes the market situation and makes decisions itself.

They do not determine what strategy they will invest in, but rather use so-called multistrategies. They do not specify that they invest only in equities, e. g. The Group is also involved in the purchase of raw material companies or only in bonds. They have a broad horizon of action. They are looking for all the opportunities that give a good chance of a substantial return on investment. In their portfolios they may have shares of companies that intend to enter the stock exchange, as well as companies that already operate on the stock exchange.

In addition, they can invest in futures contracts, stock options, raw materials or real estate. Hedgins have such an advantage over traditional funds that they can use short selling strategies. Ordinary fund e. g. buys the shares of a company that is listed on the stock exchange and holds its shares at all times. Hedgins, on the other hand, can be e. g. One day buy, make some profits from these shares and after a few days sell them.

How much can be made on such hedge funds?

This is difficult to determine precisely.

Advantages of hedge funds

  1. Highly different and independent performance of hedge funds from the situation, e. g. on the exchange

2. A large variety of financial instruments in which a hedge fund invests: shares, currencies, futures contracts, options; additionally, they can also invest on the commodity market, e. g. oil, gold, silver, silver, copper, diamonds.

3. The use of financial leverage that makes it possible to invest less capital and generate profits as if a larger amount was invested.

4. Fund managers often have their own savings, which further increases their motivation to work.

5. Hedge funds, like conventional funds, charge management fees and performance fees at the end of a given trading period; this acts as an additional incentive for managers.

Hedge fund investing: