RSM230H1 Chapter Notes - Chapter 21: Offering Circular, Private Placement, Mutual Fund
Document Summary
A private investment fund that does not need to conform to the rules for publicly available mutual funds. Hedge fund managers have much greater freedom to follow aggressive or unusual investment strategies. High leverage (borrowing) enhances potential returns, and risks. High fees: 1% to 2% of assets plus 10 to 20% of profits. Not generally open to the public and notoriously difficult to gather information on. Hedge funds are lightly regulated pools of capital whose managers have great flexibility in their investment strategies. Not constrained by the rules that apply to mutual funds or commodity pools (can take short positions, use derivatives for leverage and speculation, perform arbitrage transactions, and invest in almost any situation in any market) A manager"s skill is more important in hedge funds than for almost any other managed product. Are pooled investments that may have front and back-end sales commissions. Can be bought and sold through an investment dealer.
