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Finance
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Investing
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Hedge Funds
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Money manager - who manages hedge funds
Money managers buy and sell stocks, bonds, and other instruments on behalf of the clients whose accounts they manage. Money managers are available in all shapes and sizes. There are large firms that manage hundreds of billions of dollars. This group includes familiar names in the universe of banks, insurance companies, and brokerage firms. It also includes large independent money management firms that were started many years ago by people who left the large banks and insurance companies. And then there are the small independent money managers, the so-called boutiques. Hedge funds are an important part of the boutique money management business.
Hedge funds basics: What are hedge funds?
Hedge funds often use distinctive "delivery systems" to make their strategies available to investors. The hedge fund could take the form of a limited partnership, an offshore fund, a commodity pool, or a specialized kind of separate account. Hedge funds do not typically use the mutual fund structure since this structure does not give the hedge fund manager enough freedom.
Hedge funds - establishing a new frontier
A hedge fund is thus a private investment fund, which invests in a variety of different investments. The general partner chooses the different investments and also handles all of the trading activity and day-to-day operations of the fund. The investor or the limited partners invest most of the money and participate in the gains of the fund. The general manager usually charges a small management fee and a large incentive bonus if they earn a high rate of return.
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