Fund raising and investment, Financial Management

Fund Raising and Investment:

Fund commitment requirement in Hedge Funds sometimes exceeds millions of dollars. In addition, high minimum investments are sometimes closed to new investors due to capacity constraints and close-ended nature of the Fund. Hedge Funds also limit the number of investors due to regulatory constraints. For example in the US, the Hedge Funds limit the number of "accredited" investors up to 100 (provided that not more than 35 investors are non-accredited investors with the rest being accredited investors) or number of "qualified" investors up to 500. If it exceeds this limit, then the Fund will be treated as a mutual fund and has to comply with the SEC rules and regulations followed by a mutual fund. As a result of all of these rules, Hedge Funds are typically arranged as a partnership of 100 "accredited investors" or a partnership of up to 500 "qualified purchasers" (or "super-accredited investors").

However, large Hedge Funds allow only investors having good track records and ability to maintain long-term commitment in the present Fund and probability for investment in Funds that are to be offered in future. This closed nature will restrict new investors from accessing large funds. The alternative route for the investors is Fund of Funds (FoFs), and is the only way to gain exposure to those Funds. Generally, Hedge Funds are offered with minimum investment horizon of three-year lock-in period. On completion of lock-up restriction, investors can exit by liquidation, redemption or transfer of holding to the Fund or other genuine investors.

 

Posted Date: 9/11/2012 2:13:35 AM | Location : United States







Related Discussions:- Fund raising and investment, Assignment Help, Ask Question on Fund raising and investment, Get Answer, Expert's Help, Fund raising and investment Discussions

Write discussion on Fund raising and investment
Your posts are moderated
Related Questions
Inflation and Exchange Rates To understand the impact of inflation, several terms should be understood. For example, inflation from the investors' standpoint must be clearly de

Ho can we estimate that firm is going to benefit from projec To calculate how firm is going to benefit from project we need to calculate whether firm is earning the required ra

Chrysler decides to avoid the problems associated with exporting autos to Japan by building a plant in Japan. The cost is expected to be $1 billion with $500 million to be spent no

Why would it be useful to examine a country’s balance of payments data? Answer:  It would be helpful to observe a country’s BOP for at least two reasons. First, BOP offers detail


Need for Credit and its nature On the demand side of the economy are the consumers of goods and services who require funds basically for acquiring certain consumer durables. Th

Convertible bonds can be classified into different types such as callable bonds and puttable bonds. These bonds are discussed as follows: Basics of Callable Bonds A callabl

What are the primary requirements for a successful JIT inventory control system? For a JIT system to be victorious the supplier must be willing and able to deliver materials im

Lakespring Retirement Village is home to senior citizens who are fairly independent but need assistance with basic health care and occasional meals. Jill Thompson, a licensed beaut

The XYZ company supplies products to a number of original equipment manufacturers (OEM's). It employs 5,000 mostly unionized workers and generates about $2.2 billion in revenue ann