Summary Essay Example | Topics and Well Written Essays - 1250 words - 3

Summary - Essay Example Hedge fund is often depend on the manager’s expertise, is largely offered as private investment, is structured as limited partnership and often presents a narrow range of investors. Compared to the traditional funds, Hedge funds; have an industry size of $2.6 trillion, it has an absolute return, it has short or long investment, has high strategic complexity, has lower correlation to the market, has leverage, higher turnover, high based on performance, has large minimum investment and a low transparency. Investors are high net worth people, institutional investors and funds of funds managers. For hedge funds, the minimum size of investment is often high and at least 1 million dollars. Investors often seek stable, attractive and non market correlated returns. Pension funds make up 15%, followed by individual funds 30%, endowment 12% percent and corporation 11% (Zimmermann, 2009). Hedge fund strategies cover aids in representing the hedge fund universe that includes event driven, long/short equity, global macro, multi-strategy, emerging markets, fixed income arbitrage, managed future. Event driven strategy helps to exploit pricing that results from corporate events that are often anticipated. Managed futures strategy is also known as commodity trading advisors and is an approach aimed at investing in futures contracts in equity, bond, current market and commodity (Zimmermann, 2009). It utilizes pattern and trend recognition models as well as means reversion. Fund of hedge funds entails investing in another hedge fund. The main aim is the fund, manager and strategy. Some of the key risks to the hedge fund strategy entail poor liquidity, high leverage, lack of regulation, operational risks and lack of transparency (Zimmermann, 2009). CPP is the proportion portfolio insurance which aids in ensuring a hundred percent of the capitals of the investors is protected. CPPI determines the composition of investment