The performance of a hedge fund is measured in absolute terms. They are paid an annual Management Fee (typically 1% of the fund’s assets) along with a performance fee. Performance FeesĪ hedge fund is actively managed by a fund manager. They usually allow withdrawals only on a monthly or quarterly Basis and may have initial lock-in periods. Lockup PeriodsĪ hedge fund generally has a lock-up period that is quite restrictive. Generally, hedge funds tend to cater to high Net worth individuals because of the minimum investment requirement of INR 1 crore or $1 million in Western markets. On the other hand, mutual funds resort to simple Asset Allocation to maximise returns. Hedge funds employ different and complex strategies to optimise returns. They are similar to Mutual Funds since both of them collect money from investors to invest in different avenues. ![]() The hedge fund value is based on the fund’s NAV (Net Asset Value). The main aim of the hedge fund is to maximise returns. As the name suggests, a hedge fund “hedges” i.e. Hedge Fund: DefinitionĪ hedge fund is a privately pooled investment fund that uses various strategies to optimise returns. In this article, we shall have a deeper look into what is a hedge fund, their background in India, the pros and cons, and their taxation. They have a reputation of outperforming the Market to deliver superlative returns. Hedge fund firms are always in the news, either due to its high profile investors or because of its returns. What is a Hedge Fund? Updated on Septem, 21188 views ![]()
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