Differences between hedge funds and mutual funds, Financial Management

Differences between Hedge Funds and Mutual Funds

Hedge Funds are extremely flexible in their investment options because they use financial instruments generally beyond the reach of mutual funds. The latter have regulations and disclosure requirements, which largely prevent them from using short selling, leverage, concentrated investments, and derivatives. These flexible options, which include the use of hedging strategies to protect and limit the downside risk, gives Hedge Funds the ability to manage investments better.

The strong results can be linked to performance incentives in addition to investment flexibility. Unlike many mutual Fund managers, Hedge Fund managers are usually heavily invested in a significant portion of the Funds they run, and share rewards as well as risks with investors. ‘Incentive fees' remunerate Hedge Fund managers only when returns are positive, whereas mutual Funds pay their financial managers according to the volume of assets managed, regardless of performance. This incentive fee structure tends to attract many of the best practitioners and other financial experts to Hedge Fund industry. In the US, the following differences can be measured between Hedge Funds and mutual funds

 

Posted Date: 9/11/2012 2:07:10 AM | Location : United States







Related Discussions:- Differences between hedge funds and mutual funds, Assignment Help, Ask Question on Differences between hedge funds and mutual funds, Get Answer, Expert's Help, Differences between hedge funds and mutual funds Discussions

Write discussion on Differences between hedge funds and mutual funds
Your posts are moderated
Related Questions
I need to get a good understandin about what this means?

Activity Ratio's   RT:           The Receivables Turnover ratio is the ratio between sales to accounts receivables. This says exactly how fast a company can collect on the s

Turnover has increased 10% since 2009 even if this is at the expense of a drop in the gross margin earned which has fallen from 35.0% to 32.7% which has resulted in only a marginal

European Community (EC) An economic alliance, evaluated in 1957, designed to encourage trade and economic cooperation between its members.  The EC is also called the European

QUESTION a) Discuss the importance of diversification in the context of stock markets using appropriate numerical illustrations. b) Mimine and Minush are two companies with


How can we interpret financial ratios??

Define Floating Rate Notes Floating-rate notes (FRNs) are commonly medium-term bonds along with their coupon payments indexed to some reference rate.  Common reference rates a

The minimum value is the lower limit for the market value of a convertible bond. It is equal to the greater of the conversion value and the straight value. We can

Explain about the investment decision- financial management The investment decision relates to selection of assets in which funds would be invested by a firm. Assets which can