11 May 2010
Hedge fund in layman terms is a fund floated by Financial Institution, usually for High Net worth clients, not for retails investors. They have different exposures and several financial products just like mutual fund. Unlike Mutual Funds, they do not always invest in publicly traded funds they invests in derivatives, futures or foreign exchange and host of several vanilla or complex financial products.
Hedge Funds are alike mutual funds but difference is that 1. They arrange money privately. Usually they are in the form of LLC or LLP. 2. Hedge Funds is a big market in USA. 3. they don't have to follow the stringent rules of SEC as in the case of mutual funds. 4. They can invest any where in Lands, Minerals, Oil, Shares etc. 5. Their motto is to provide the best return to investors.