Characteristics of Hedge Funds

Hedge Funds pic

Hedge Funds

Cofounder of BlueCrest Capital Management, Ltd., Bill Reeves of Hawaii is an experienced financial leader. Having previously served as a trader for J.P. Morgan and Chase Company, Bill Reeves of Hawaii helped BlueCrest Capital Management become the third-biggest hedge fund firm in Europe with about $35 billion from institutional investors around the world.

In general, hedge funds share a few similarities with mutual funds. Hedge funds cannot engage in insider trading or commit fraud, but they are not regulated by any sort of federal or international organization. Hedge funds are not required to register with the Financial Industry Regulatory Authority or the U.S. Securities and Exchange Commission (SEC), but many funds still choose to register with these entities to give their investors peace of mind. In part, it is this lack of official regulation that allows hedge funds to have higher returns. Hedge fund managers have a much wider array of investment techniques available to them than traditional money managers.

Another trait of hedge funds is that they are illiquid. This essentially means that investing in a hedge fund is a long-term decision. In many cases, investors cannot remove money from the fund for at least two years. While this may be unsettling to some investors, hedge funds are typically managed by individuals who are extremely knowledgeable about the field. Plus, most hedge fund managers get bonuses based on how the fund performs, so they are incentivized to make good investment choices.


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