Hedge fund is an alternative investment using pooled funds that are invested using different strategies in order to earn active return for investors. Funds may be making use of leverage and derivatives in domestic as well as international market, with the aim of making high returns. It is most important to know that the funds generally require a credited investor because they need fewer SEC regulations as compared to other funds. These funds face are under fewer regulations as compared to mutual funds,
Stock Funds are constructed to take an advantage of uncertain market opportunities. Investment firms use different strategies; those are generally classified according to the investment style. These funds are most often set-up as the private investment that is open to a limited number of credible investors. Fund generally requires a large initial minimum investment. Investors have to keep their money for at least one year that is known as locked – period. Investors can withdraw their money at certain intervals such as quarterly or bi- annually.
Key characteristics of investment fund
- Closed-end funds are allowed to take money only from the credited investors. They should have a certain annual income. As such, security and exchange commission deems only qualified investors who are suitable to handle the potential risks to invest in these funds.
- Bond funds are not limited only to the bonds and stocks, basically they can invest in anything such as in land, stock, real states, derivatives and currencies.
- Bond fund will often use borrowed money to amplify returns.
- Bond fund charges both the expense ratio and performance fee.
- There are many more specific characteristics that stock funds define, but they are only private investment vehicles that are basically allowed only to the qualified or wealthy investors to invest in.