Categories: Mutual Funds

Hedge Fund

Hedge Fund is a specialised product where funds collected from investors is used to invest in different products like shares, foreign exchange, derivatives or other specialised investments. As Hedge Fund is a unique product, it is not available for investment to small retail investors. It is quite diversified, but is not risk free. In fact, a Hedge Fund might be riskier than say, an equity Mutual Fund.

What are the features of Hedge Fund?

Some features of a Hedge Fund are :
a) The minimum investment requirement for a Hedge Fund is high (INR 1 crore and above)
b) Hedge Funds do not come under the regulatory purview of SEBI
c) A Hedge Fund is suitable for HNIs, institutions or other accredited investors, who understand the product, return capability and also the inherent risks
d) A Hedge Fund can have higher expenses along with the potential to earn higher returns.
e) Unlike other products like mutual funds, a Hedge Fund has lower liquidity
f) As there are multiple strategies at play, there are certain restrictions on withdrawal or redemption in a Hedge Fund

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