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Hedge Fund Strategies: How to Predict and Capitalize Without Investing in Them

Similar Post(s): Asset Management Strategies

By Jeremy Winters

There are numerous hedge fund strategies to choose from. These types of funds are recognized for placing funds in many different investments. In lots of situations it is possible to realize a greater return on investment with these funds than you could by using a regular mutual fund.

What They Invest In

These funds put money in various investments. In the stock market alone they utilize a wide variety of hedge fund strategies for investing. As an example, they will buy and hold shares, sell them short, as well as buy stock options.

However, they are not limited to the stock market. Some hedge funds place cash in properties, foreign currencies and bonds. It actually depends on the fund.


With hedge funds, you are required to pay out a performance fee as well as a management fee, assuming it does well. This fee will go to the fund manager, who is the person who determines what to invest in.

Return On Investment

A typical return on investment differs from one year to the next. It actually will depend on the market sector they invest funds in, and how the overall economy is doing. It is possible to realize a double digit return on investment in some years, but for other years you'll most likely make no greater than a regular government bond.

Who can Make Investments In Them

You have to be accredited to put money in a hedge fund. They have a tendency just to take investments from large organizations like financial institutions and businesses having a large amount of cash available.

How You Can Choose The Right Fund

When you are accredited, then concentrate on funds that have received a higher return on investment for quite a few years. The past performance of a fund indicates it is likely to go up in the future. In the event that it hasn't done very well in previous years, that is a warning signal that you need to keep away. If you do nothing except evaluate the previous performance, you will still probably notice good results.

How You Can Capitalize On These Funds Without Investing in Them

The reality is that many people won't be able to invest cash in hedges, because they are not approved investors. Nevertheless, that doesn't mean they can't make use of these funds. Bear in mind, these funds are sometimes worth many millions.

Basically, whenever they make investments in something, it tends to make the price of that investment go up. For that reason, buying a stock just before a major fund can mean substantial returns on investment. Of course, it is very difficult to tell where they are going to put their money, which means you need to be a knowledgeable investor and watch certain market indicators in order to predict this. So far as hedge fund strategies go, this tends to be a worthwhile one.

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