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Hedge funds are those types of mutual funds set up in private investment limited partnerships. They are a type of private investments which are unregistered, in unregistered partnerships with pool of duns that could be invested and traded in various markets.
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What is the difference between hedge funds and long only funds? Having quality and professional guidance in your personal or business journey is important and crucial. For this, you need to hire a good wealth management or an asset management company that will take care of your portfolio and see to it that it grows. Over the years, there are various types that the wealth management companies guide their investors to invest in. Mutual funds, hedge funds and the new entrant long only funds are one of them. Let’s look into these three with greater depth. Hedge funds are those types of mutual funds set up in private investment limited partnerships. They are a type of private investments which are unregistered, in unregistered partnerships with pool of duns that could be invested and traded in various markets. Depending on the securities that they invest in, hedge funds can be divided into different types namely, the domestic hedge funds, off-shore hedge funds and something known as funds of funds. The domestic hedge funds are those that are open to limited types of investors. Those investors that eligible to their country of origin’s taxation. The offshore hedge funds are ones that are set outside one’s country of residence, usually those that have low taxes. And lastly, funds of funds are those mutual funds that take up investment in other hedge mutual funds, instead of individual securities. On the other hand, long only funds are those funds that take just long positions. Which means, it seeks undervalues securities in order to decrease the volatility with the help of cash and some incomes that are fixed or even by the help of some very basic assets. The long only funds, also uses some options, futures so as to keep the risk at bay and attain great exposure for the physical investments. Exposure, that is being talked about here, is gained also through those investment funds that aren’t hedge funds. These hedge funds go after only those strategies that they believe would give proper returns irrespective of any index benchmark and whatsoever the market conditions. This is very opposite to older traditional funds. www.avendus.com
The long only funds are a lot like the hedge funds. Their main aim is to make money and save capital no matter what the market situation is. For them to attain this goal, it is very important that the manager is well-skilled and knows his working. There are certain things that need to be remembered before you go ahead and invest in hedge funds mutual funds. Firstly, the funds that you are dealing with are short selling. These are usually adopted by bigger investors. If investment and gains is your goal, then you need to brace yourself for a wide range of research and tracking of investment on your side. Secondly, the risk factor cannot be ignored. It is not the fact that the hedge mutual funds are risky because of derivatives, but the level of regulation makes it riskier. Plus, investing in any funds such as ESG funds in India or hedge funds is also expensive. A minimum of one crore is the ticket size. www.avendus.com
