Global Hedge Funds
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Global Hedge Funds are funds managed by well educated and experienced fund managers who are always on the prowl of finding out opportunities around the globe for appreciating the portfolio. To this end, the fund managers use a wide array of strategies and latest investment techniques such as leveraging, arbitraging, hedging, etc. The tools often used by the Global Hedge Funds include short selling, optimum use of the options, swaps, swaptions, futures market, and many other derivative instruments etc.
Global Hedge Funds are funds managed by well educated and experienced fund managers who are always on the prowl of finding out opportunities around the globe for appreciating the portfolio. To this end, the fund managers use a wide array of strategies and latest investment techniques such as leveraging, arbitraging, hedging, etc. The tools often used by the Global Hedge Funds include short selling, optimum use of the options, swaps, swaptions, futures market, and many other derivative instruments etc.
Global Hedge Funds are private partnership companies and are generally unregistered in nature. In this partnership it has been generally observed that the fund manager, who is managing the fund on behalf of several investors, is one of the partners of the organization. The Global Hedge Funds are meant for those investors who are generally sophisticated and belong to the upper echelon of the income strata. This is because the minimum amount of investment per investor is quite high. Generally the relatively new funds have a minimum investment criteria ranging between two hundred and fifty thousand US dollars and five hundred thousand US dollars. But in case of the established Global Hedge Funds, this minimum required investment might hover around US $ 1,00,00,000.But this must be mentioned here that this cut off mark is not hard and fast and are subject to change from time to time and also from company to company.
The Global Hedge Funds pool money of many high end investors in one place. The investors who generally invest in such funds can be divided into two groups namely the Accredited Investors and the Qualified Purchasers. Accredited investors of the Global Hedge Funds are the ones who either individually or in combination with his or her spouse have a net worth of more than one million US dollars. The investors may also be called an accredited investor if the concerned individual has a personal income of over two hundred thousand US dollars in the last two fiscal years. In addition to this, the investors who have an income of over three hundred and thousand US dollars for the last two years are also considered to be accredited investor of Global Hedge Funds.
Another form of investors in the Global Hedge Funds are the Qualified Purchasers. The investors fall into this category if the investor has invested at least five million US dollars, either individually or jointly with his or her spouse. The businesses which are family owned can also qualify for the Qualified Purchaser group if the concerned business entity has an ownership on investment of five million US dollars.
The Global Hedge Funds also have some associated caps with the number of investors that could invest in a single fund. In case of the Accredited Investors the maximum limit for a single fund is hundred. But in case of the Qualified Purchasers, there is no limit for investing in a specific hedge fund.
These Global Hedge Funds are not registered with the US Securities and Exchange Commission because they are not bound within USA and can venture to any country of their choice and hence the tax laws of USA cannot be enforced on these Global Hedge Funds. Thus, the actual data related to these funds remain elusive to the SEC until and unless they personally publish data for the public. According to one estimate, the total number of Global Hedge Funds in USA is more than nine thousand and the total asset under its management is approximately US$ 1.3 trillion. On an average the general trend shows that the addition of assets to the Global Hedge Funds per year is twenty five billion US dollars.
The Global Hedge Funds assure their clients with a targeted increase in their capital. This may be in terms of absolute performance or returns with specific targets. In order to achieve the goals these funds are able to implement many trading strategies and tools which remain elusive in case of other pooled funds like Mutual Funds. The investment techniques and strategies that are usually used by the Global Hedge Funds are short selling methods, arbitraging, hedging and leveraging. These funds do not give any assurance to its investors for any protection of their funds because they are not bound by any laws related to any type of federal or state securities. The Global Hedge Funds have a certain hush-hush affair in case of taking money from the investors and generally don’t offer the investors any kind of disclosure.
The investments through the Global Hedge Funds are basically illiquid in nature because the investors cannot get back the invested sum at any point of time. This investment remains locked for a minimum period of one year. The fund managers of the Global Hedge Funds utilize a lot of investment avenues starting from the equity shares to assets of fixed income type, Commodity Trading Advisor (CTA) Funds, Forex market, etc.