A large number of business owners give a lot of consideration to making best use of their finances and the future of their hard earned money. Good businessmen will spend a lot of time in carrying out a research of the financial market and work upon developing skills in investment and trading and managing their business more efficiently.
One of the important moves that most of the business people hear about is the hedge funds. These are investment funds for limited number of investors who gain eligibility based on the market regulations undertaking a wider range of trading ventures and investment options.
One of the major characteristics of hedge funds is that they employ some of the best money managers of the market, paying them best compensation plans and huge salaries. That is why, a huge number of investors are coming into the market of hedge funds and leveraging their benefits. As a hedge fund manager, you will get a yearly management fee of at least 1 to 5% and no matter how the market is doing; you will surely get your basic salary every year.
Hedge funds have their own investment strategies, that helps in identifying the types of investments and the methods used in the investment. These kinds of investments use shares, debts and commodities and that too keeping away from the risks through derivatives and short selling.
Why hedge funds are offered only to limited investors and professionals is due to their previous income and investment portfolio. The opportunities for hedge fund investments provide them exemptions in the regulations which govern leverage, short selling, fee structures, liquidity of the interests on funds and derivatives.
With hedge funds, many of the investors can turn their net asset value into a huge amount of money. This kind of investment in undoubtedly one of the most sought after investment opportunities, reining the specialty market such as trading within debt and derivatives.
The first hedge fund investment was created by Alfred W Jones in the year 1949, who had a background in financial journalism. The idea of hedge funding came from hedging the risk involved in this investment and allowing the investment managers or management firms to make their own decisions upon their investments, purely on a commercial basis.
Another prominent characteristic of hedge funds is that it is an investment scheme meant for the wealthy people only. it would be very difficult for the retail investors to invest in hedge funds and that is why, it is the dominion of the rich.