Question

In: Finance

Use the Popularization of Hedge Funds discussion thread to discuss the impact that hedge funds had...

Use the Popularization of Hedge Funds discussion thread to discuss the impact that hedge funds had on institutional and wealthy investors.

What are hedge funds? Name 3-4 of most popular hedge funds in today’s market? What would you attribute the popularity of hedge funds to?

Solutions

Expert Solution

The hedge fund investments have increased to a large extent making more than $3 trillion contributed mainly the institutional investors. The institutional and wealthy investors are piling up their funds into the hedge funds. But at the same time, institutional investors have impacted with the high fees and the insignificant returns. Also, the risk and efforts involved are quite high as compared to other investments.

As per the latest survey of the Ernst & Young Global, the most of the institutional hedge fund investors intend to continue the current hedge fund allocation. The investors are now heading towards the customized hedge funds which have customized fees and liquidity terms.

Hedge fund is an alternate investment vehicle having a pool of underlying securities which is designed specifically for institutions and individual with significant assets.

The top hedge funds include:

  1. Bridgewater Associates.
  2. AQR Capital Management.
  3. JPMorgan Asset Management.
  4. Renaissance Technlogies.

The hedge funds became popular with time because of the following reasons;

  1. Need of the investors for consistent returns and low volatility.
  2. Outstanding performance of the managers.
  3. Protection of capital in difficult times.

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