Most hedge funds in the United States adopt the most advanced investment strategies of Wall Street. To be exact, it is not so much a hedge fund as a private equity fund. First, because the assets managed by these funds are raised through private placement. Second, because some of them adopt the strategy of hedging risks to manage assets, and some adopt the strategy of predicting market trends. Strictly speaking, this kind of fund that predicts the market trend cannot be called "hedge fund". But by convention, all these private equity funds are called hedge funds on Wall Street.

manage

Hedge funds are currently unregulated. The Securities Law of the United States 1933, the Securities Exchange Law of 1934 and the Investment Company Law of 1940 all stipulate that institutions with less than 100 investors need not register with the financial authorities such as the Securities and Exchange Commission of the United States when they are established, and are not subject to supervision. Because investors are mainly a few very sophisticated and wealthy individuals, they have strong self-protection ability. In contrast, the supervision of mutual funds is relatively strict, mainly because investors are the general public and many people lack the necessary understanding of the market. In order to avoid public risks, protect the weak and ensure social security, strict supervision is implemented.

Investor qualification

Investors in hedge funds have strict qualifications. The securities law of the United States stipulates participation in the name of an individual, with an income of at least $200,000 in the last two years. If you participate by surname, your husband and wife have earned at least $300,000 in the last two years; In the name of the organization, the net assets are at least $6,543,800+0,000. 1996 made a new regulation: the number of participants was expanded from 100 to 500. The condition of participants is that individuals must own investment securities worth more than $5 million, while general funds do not have such restrictions.

operate

The operation of hedge funds is not restricted, and investment portfolios and transactions are rarely restricted. Major partners and managers can freely and flexibly use various investment technologies, including short selling, derivatives trading and leverage, while general mutual funds are subject to more restrictions in operation.

Financing mode

Hedge funds are generally initiated through private placement, and the securities law stipulates that no media should be used to advertise when attracting customers. Investors mainly participate in four ways: according to the so-called "reliable investment news" obtained by the upper level; Know hedge fund managers directly; Transfer through other funds; Specially introduced by investment banks, securities intermediary companies or investment consulting companies. The general * * * funds mostly entertain customers through public offering and advertising.

Can it be established offshore?

Hedge funds usually set up offshore funds, which has the advantage of avoiding the restrictions on the number of investors and tax avoidance in American law. It is usually located in tax havens, such as Virginia Island, Bahamas, Bermuda, Cayman Islands, Dublin and Luxembourg, where taxes are very low. Of the $68 billion hedge funds, $70 million is invested in offshore hedge funds. According to statistics, if "fund of funds" is not included, the assets managed by offshore funds are almost twice that of onshore funds, while ordinary * * * funds cannot be established offshore.

Therefore, general funds can also hedge, but there are many restrictions.

Compared with Public Offering of Fund's investment strategy of choosing high-quality stocks, the strategies adopted by hedge funds have a * * * feature: low risk and high return. Under the premise of controlling the risk within the acceptable range of investors, it is called leverage to enlarge and use all your own funds. The so-called amplification or leverage means that in addition to using its own funds, it will borrow more money from brokers for investment to improve the rate of return. Investors in public offering funds are ordinary people, while investors in hedge funds are usually very wealthy individuals, and the minimum investment must exceed1000000 USD. Well-known hedge funds on Wall Street often ask investors for a minimum investment of $10 million, provided that they cannot withdraw their capital within two to three years.