Hedge funds funds that use hedging methods are called hedge funds, also known as hedge funds or hedge funds. It refers to a financial fund that aims at profit after financial derivatives such as financial futures and financial options are combined with financial instruments. It is a form of investment fund, which means "risk hedge fund". Hedge funds use various trading methods to hedge, transpose, hedge and hedge to make huge profits. These concepts have gone beyond the traditional operation scope of preventing risks and ensuring benefits. In addition, the legal threshold for launching and establishing hedge funds is much lower than that of mutual funds, which further increases their risks.
What's the difference between mutual funds and hedge funds?
Mutual funds:
1. Strict management;
2. Rarely use leverage (that is, borrow money to invest), and at most only occasionally use "shorting" and financial derivatives.
3. The starting point of investment is low, generally USD 500.00.
4. Ready for sale;
5. The remuneration of fund managers is generally in the form of wages and bonuses;
6. Fund managers don't need a lot of investment;
7. The investment strategy is relatively stable;
8. The investment goal is to outperform the market.
Hedge funds:
1. Loose management;
2. Leverage, options, shorting and forward are widely used;
3. The starting point of investment is high (generally from USD 6,543,800+10,000);
4. Fixed date of sale (that is, it cannot be sold at any time);
5. The remuneration of the manager is linked to the fund income (such as 25% of the profit);
6. The manager himself is a big investor;
7. The investment strategy is changeable.