Chapter 20 (exam 3)

Chapter 20 (exam 3) - Chapter 20 Chapter Mutual Funds vs....

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Unformatted text preview: Chapter 20 Chapter Mutual Funds vs. Hedge Funds Hedge Funds Hedge Similar to mutual funds, but not registered and not subject to SEC regulations and Available to institutional and high net worth individuals individuals Can pursue investment strategies that are not allowed for mutual funds not Grew from $50 billion in 1990 to $2 trillion in in 2008 2008 Hedge Funds vs. Mutual Funds Mutual Funds Transparency Investors Strategies Hedge Funds Public info on portfolio composition portfolio Info provided only to Info investors investors Unlimited < 100, high dollar 100, minimums minimums Must adhere to Must prospectus, limited short selling & leverage, limited derivatives usage derivatives No limitations 20-3 Hedge Funds vs. Mutual Funds Mutual Funds Hedge Funds Liquidity Redeem shares on demand demand Multiple year lock Multiple up periods typical up Fees Fixed percentage Fixed of assets; typically 0.5% to 2% 0.5% Fixed percentage Fixed of assets; typically 1% to 2% plus incentive fee = 20% of gains above threshold return return 20-4 ...
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