What Are Some Common Misconceptions About Hedge Funds?
There are many misconceptions about hedge funds and their role for investors, including the following: 1. Hedge funds are just for mega-wealthy investors with millions to invest. Hedge funds used to require minimum investments of millions of dollars – and some still do. Today, though, investors can become limited partners by investing as little as $100,000. Many require minimum investments of $250,000. 2. Hedge funds are risky. Some hedge funds are very risky. Others carry less risk. The key is to find a hedge fund with an investment strategy that matches your tolerance for risk while also fitting your overall investment portfolio, financial goals and investment timeline. Many investors use hedge funds to control risks. A hedge fund that is designed to perform best when the market turns down, for example, may be used to hedge investments against market risk. 3. Hedge funds have been plagued by scandals. A very small number of hedge funds have been operated by unethical money managers w
