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Hedge Fund Frenzy
Hedge Funds are a bit funny; you have to pay 3 to 4 percent for management fees and other fees, plus about 20 percent of the profit, yet more and more people are crazy about them. For many years average hedge fund returns were 11 percent according to Business Week, but now the returns have become lower on the huge amounts invested in hedge funds. Maybe there is too much competition. Many smaller investors are involved in hedge funds through fund of fund groups, which require as little as a ,000 investment, as opposed to a million investment directly in a hedge fund. A fund of funds is a mutual fund that invests in several different hedge funds. This gives an opportunity for smaller investors, but the fees are higher, since there’s one more level of management to deal with. Altogether there is believed to be .5 trillion in hedge fund money in about 8,000 different hedge funds. They are under increasing pressure to be regulated after the largest collapse of a hedge fund ever, the Amaranth fund, which cost investors over billion.
About the Author: Adam Heist is widely recognized as an expert in
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