Cash is Pouring into funds: An expensive Touch of Glamour
The market always gets flooded with a variety of investment options and the trick of making the most out of them lies in smart investment, regardless of the choice you make. Profit is the ultimate goal, whichever form of investment is chosen. The stock market provides a plethora of investment options but they are meant for the brave hearts and those with an eagle’s eye. To ride the bull, you need the right investment decision or you might have to face bad consequences. Investment today is not only by choice but also by assessment.
The hedge fund is one investment option which started in 1949. It was supposed to neutralize the bearish effects of the stock market while the investor struggled to balance his portfolio of assets. It is a congregation of funds which was aimed to furnish attractive benefits in the form of high returns. Another reason for choosing hedge fund can be diversification of portfolio risk. These two factors have got large number of investors stuck to hedge funds but the present scenario doe not appear encouraging. With the time, hedge funds have acquired an unattractive form and have turned out to be at investors’ disapproval.
Hedge funds are managed by investment managers who (claim to) target high returns independent of market conditions. Obviously, the high returns are labeled with high fees. The hedge funds have the liberty of not getting registered with the Securities and Exchange Commission (SEC). It may not seem wondering if investors land up paying more than their actual investment to avail the (so called) smart services of these strategic managers. Normally, a fee of 1% to 3.5% is charged for managing these funds, but they may come with additional charges in the form of performance benefits/bonus. Furthermore, the liquidity of invested money is lost for sometime, which may reach about a year.
These managers do not hesitate in intruding into the investor’s personal life to achieve success. They actively tour the globe to get their investors and can spend handsomely towards appointing researchers in the field. All these expenses are supposed to be directed to the investor later, after all. It is not wise to pay from your pocket for someone else’s profit, is it?
Hedge funds have been seen to bring unwanted volatility to the financial market, which at times, can be to the disadvantage. They can result in price rise which may not be appealing to the economy. The profits are rather skewed than being symmetrical. The modus-operandi of the hedge fund players is an enigma in itself. These funds can suddenly drive the market to reach unimaginable heights while at the other time wipe away the economy’s attractive appeal. Sometimes, it is argued that the role played by the fund manager is the most vital aspect of hedge funds.
However, it is seemingly impossible to escape the market’s volatile nature by playing a blame game. Examples like the Quantum Fund (1993) managed by the 63-year-old George Soros have been to the credit of hedge funds. The several billion dollars Quantum Fund reached astounding heights owing to the high returns from hedge funds.
Hedge funds cleverly escape the market fluctuations and seemingly shield the investor from the pitfalls lying within. The fast-track inclusion and exit from the market enable hedge funds to protect the investor. Open market systems provide an opportunity for hedge funds. The fat returns achieved by these funds are so alluring that markets do not wish to sideline them. Such is the impact of hedge funds that other players in the market can be directed to alter their strategies in line with them, at least for some time.
With hedge funds, the market has to gear up for alluring gains while simultaneously get ready for vanishing glory. They apparently cannot be eliminated from the list of investors but need to be dealt with extreme caution and expertise to get the best results.
About the author: Amanda Kidd is a blogger who doesn’t idolize anyone when it comes to style. She loves experimenting with her hair and talks a lot about home remedies for beautiful hair in her beauty articles.