What are hedge funds?
Hedge funds are the funds of collective investment, which, in contrast to mutual and mutual funds can invest money on all financial markets (stocks, bonds, currencies, options, futures, etc.), can tear of not only long, but also short positions on a variety of instruments, as a result of what - can make profit as the growing, so and in a falling market.
In one of the previous articles we have already talked about diversifying Your assets and the investment of these funds in foreign stock markets. You even have been given the «Magic formula», intended for the selection of shares it is the Western companies. While Your capital is only tens or hundreds of thousands of dollars, on a diversification in the broadest sense of this term can be, of course, not to worry. But when the capital will be millions $, consider a more serious diversifying Your assets and on the translation of some of them abroad You still have to.
The majority of the citizens deterred from direct investment in the foreign stock markets. But those of domestic investors, who are financially literate more or less decent and who is ready to invest money abroad, as a rule, still know little about those Western companies in which to invest. You can, of course, is not to bother studying statements of foreign companies and invest in Western mutual funds, similar to mutual funds, only mutual funds, as well as Mutual funds, grow and fall together with the rise and fall of the foreign stock indexes. Well, and about the incredibly large number of mutual funds and complexity to choose from them the best, not only for the private investor, but also an American, and even say not worth it. As we want to, in spite of everything, to invest their funds in the West, but not to spend days on end for the analysis of the «Dow Jones» or «S&P», not clutching his heart every time, when the same «S&P» falls by 40%, and just invest your money and forget about them for a while. How do you want to find such a Fund, which placed to investors ' money on foreign exchanges, conducting the research and analytical work for them, and Yes even give this a certain percentage yield, regardless of fluctuations, regardless of the growing «Dow Jones» or falls!
If You think that such an idealistic picture is more like a fairytale than reality, You are mistaken. Incredibly, but among investment instruments is the one, which corresponds to all demands and requirements articulated above. And what is this tool?
Of course this tool is called a hedge Fund.
Usually hedge Fund is characterized as a kind of «investment pool», formed from the money of private investors, managed by professional managers, using a wide range of investment instruments, and are offshore or other jurisdictions with preferential íàëîãîîáëàæåíèåì.
The very first they appeared in the USA in the 40-ies of the last century. Originally it was an ordinary private investment partnerships that invest money in the stock market, as well as in derivative instruments (derivatives). U.S. funds are outside the area of the investment company Act of the United States, as well as the Law on securities, providing for the compulsory registration in the Commission under securities and stock exchanges of the USA.
However, there are very strict restrictions imposed by the us authorities on this type of investment. So, for example, the number of investors in one Fund should not be more than a hundred people, the shares may not be distributed freely and be available to all comers, private investors wishing to invest their funds, should have an annual income of not less than 200,000$ in the last two years, or have net assets of not less than 1000000$, etc., etc.
Today this form of collective investments is one of the fastest growing financial sector. The annual inflow of Finance is of the order of 100 billion dollars! The average yield is typically around 20% per annum (in us dollars). If you compare the interest rates of credits in Western banks, the yield of this very, very impressive. In comparison with mutual funds they show almost twice as better rate of return and this with a very small market risks and professionalism of managers.
