Hedge Fund Investor
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Hedge Fund Investor is the high net worth individual who are able to invest in large amounts and look for high returns through Hedge Fund investment. These investors give their money to the fund manager of a Hedge Fund for a certain period of time and in turn the fund manager assures a specific rate of return or a specified return in absolute terms. The small investors are generally not allowed in this hedge fund market since it is of low value to them. The most important thing that should be noted is that the Hedge Fund Investor is required to lock in the invested money through the hedge fund for a specified time period. The minimum period for investment through the hedge fund route is generally 1 year.
The Securities and Exchange Commission of the United States Of America has made certain guidelines on the basis of which the Hedge Fund Investor are classified into two broad groups namely
- Accredited Investor
- Qualified Purchaser
Accredited Investor is a person or organization or institution who fulfills one of the following criteria :-
- If a person has personal net worth more than the one million dollar mark or jointly with his or her spouse then the person would be entitled as a Accredited Investor.
- If a person has a level of income over the two hundred thousand US dollar mark in the past two years then he or she would be entitled to be regarded as Accredited Investor.
- If a person happens to be a partner or executive officer or director of the issuing company of the security then the concerned individual would be called as Accredited Investor.
If a person has a joint level of income along with his or her spouse more than that of the three hundred thousand US dollar mark in the past two years and is expected to mainain the same in the current and coming fiscal then he or she would be entitled to be regarded as Accredited Investor.
Qualified Purchaser is a person or organization or institution who fulfills one of the following criteria :-
- An investor who has a total ownership of assets of at least five million US dollars then that person would be regarded as Qualified Purchasers. The asset types on which the investor has ownership may include all types of securities (equities, bonds, etc.), real estate properties for the investment, liquid money, CDs, etc. All these can be used by the investor for investment purposes.
- In case of the institutional investors the minimum amount of ownership of assets should be twenty five million US dollars.
- In case of the businesses where it is controlled by the family, the accumulated ownership of assets for the purpose of investment should not be less than the five million US dollar mark.
Hence the Hedge Fund Investors are the ones who are classified in accordance with either of the asset owned or income of the concerned person or institution.
