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Would someone please explain what hedge funds are about? Can anyone suggest
a good book or 2?
Hedge funds are simply limited partnerships or LLCs that operate much like a
mutual fund. However the main difference is that they have clients who are
very wealthy "qualified investors." Because these investors are supposedly
sophisticated the government figures that they are smart enough to look out
for themselves so the hedge funds are not regulated in the same manner as
mutual funds.
Because hedge funds are not regulated they cannot be marketed to the general
public. Hedge funds can go long and short and use very large amounts of
leverage. Hedge funds are also allowed to charge management and performance
fees for their services. The standard arrangement is a 1% annual management
fee plus 20% of profits.
You can find a lot of general information about hedge funds just by doing the
usual search engine queries on the web.
Chuck LeBeau
www.traderclub.com
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