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About
Hedge Funds |
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Why
invest in hedge funds?
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Why
should you invest in hedge funds?
Hedge funds have historically outperformed traditional funds
and broad market indices, especially during times when share
and bond markets decline in value.
A key factor to the success of hedge funds is that
returns are not dependent on falling interest rates or rising
share markets. In
fact, the inherent volatility caused by economic uncertainty
presents hedge fund managers with profit opportunities. Hedge
fund managers are able to invest from both the long and short
side of markets (that is both buy securities anticipated to
rise in value and short sell securities expected to fall in
value) enabling them to be profitable when traditional funds
and market indices are incurring losses.
Also, hedge fund managers are primarily compensated by
providing their investors with superior performance, creating
an alignment of interests not typically found in the
investment community.
The other benefit of hedge funds is their ability to
provide real diversification within a portfolio that also
contains traditional funds, shares, bonds, property and cash.
This is because hedge fund performance is largely
driven by the skill of the portfolio manager and not changes
in interest rates, share markets and other economic factors.
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