Hedge Fund Policy Essay -- Economics Wealth Papers

Hedge shop Policy What bugger offs a hedging gillyflower such a unique investment? And why is it so controversial? many a(prenominal) feel the risks of a hedge origin powerfully outweigh its benefits. And with some funds, it does. But when a hedge fund strives, it has perfect potential. It is arguable that the regulation on hedge funds, or lack on that point of, is what allows for so many to f falsify. However, despite various suggestions for policy changes, a some lemons soothe remain. Would changes in policy and regulation of a Hedge Fund allow it to be a more attractive investment hazard? Although some alterations could make the hedge fund a safer investment, some risks argon completely unavoidable. Ultimately, these changes may not only create more problems, except also take away from the uniqueness of this remarkable form of investment. A hedge fund is typically a private partnership invested in general in publicly traded securities or futures. They are limited to 99 investors and assume large minimum investments, which can range from $25,000 to several million dollars. lx five percent of the investors must have a net worth(predicate) of at least $1 million. A general partner, who uses sophisticated strategies to make bets on the fund?s direction, and generally receives 20% of the profits, leads the fund. Hedge fund strategies fall into four open categories absolute return, long/short equity, issuance driven, and global asset allocation. Absolute driven strategies are known as market-neutral funds, which seek to moderate the effects of overall market forces. Long/ piffling hedge funds, which represent about half of the assets in the hedge fund industry, seek to profit from underpricings by buying long, and overpricing through short selling. example driven hedge funds ... ... able to grow and have the leverage it had, if it had not been lent the money, said Bert Ely. Though many may beg that hedge funds do more harm than good, they are st ill extremely popular investments and have proven to be very successful. Many have benefited with the current hedge fund policy and see no need for regulatory changes. Various proposed changes may not, in fact, be in all beneficial. Once implemented, the suggested solutions could create more problems for the hedge fund world. And such changes would alter the characteristics that attract so many to such incredible investment opportunities. In the end, a better hedge fund policy is neither plausible nor desirable. Sourceshttp//library.hbs.edu/hedgefunds.htmhttp//www-personal.umd.umich.edu/mtwomey/newspapers/100198he.htmlhttp//www.bernstein.com/perfstrat/products/ts_020401.htm