August 12, 2006

Main Characteristics of Hedge Funds

Hedge fund business is growing day by day. If you are planning to invest in a hedge fund, you must know its key characteristics. The following characteristics of hedge funds make them popular in adaptable:

• Hedge funds utilize a variety of financial instruments to reduce risk and enhance returns.
• The also minimize the correlation with equity and bond markets.
• Many hedge funds are flexible in their investment options.
• Many hedge funds have the ability to deliver non-market correlated returns.
• Most hedge funds are managed by experienced investment professionals who are generally disciplined and diligent.
• Pension funds, insurance companies and private banks invest in hedge funds to minimize overall portfolio volatility.
• Majority of hedge funds are highly specialized and trade only within their area of expertise and competitive advantage.

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