A Hedge Fund is an Alternative Investment Fund that pools funds from a limited number of private investors and employs aggressive investment strategies; including investment in domestic and offshore derivative products, to maximise returns for its investors.
Hedge Funds typically are subject to less stringent regulatory control and disclosure requirements than other collective investment schemes like Mutual and Pension Funds.
Hedge Funds place a cap on the number of investors and require a very large minimum investment. They are therefore mostly restricted to high net worth (HNI) investors with a high propensity towards taking risks.
A hedge fund investment generally carries more risk than traditional collective investment schemes like Mutual Funds.
In case of a Mutual Fund, investments are restricted mostly to Corporate Stocks and Bonds as well as Government debt. However, Hedge Funds typically apply aggressive investment strategies and are known to invest in a variety of investment products including stock derivatives, real estate, commodities like oil or even in Art.
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