Vega Asset Management

When you are looking at hedge funds there are several things that are very important to remember. The first is that hedge funds do not involve hedging, or trimming bushes, or anything else involving hedges in real life. The term hedge funds does however refer to non-publically offered investments. Often hedge funds are created by wealthy investors, or even companies to help increase the net worth of the portfolio without making the portfolio a public offering.

Hedge funds are typically allowed to claim several exemptions that can make them a very attractive option to wealthy investors because of the fact that they are not publically offered and they do not allow anyone to invest. Because of the strict rules that apply to hedge funds they tend to be very secure, and are typically managed by someone who is experienced. Because of the restrictions on hedge funds the only people who can invest are considered either qualified purchasers or accredited investors.

Because hedge funds are private offerings they are not allowed to be advertised, and as such are also very difficult to locate if you are interested in investing. Typically it is much easier to create a new hedge fund rather than becoming approved to invest in a currently existing hedge fund. In order to be allowed to participate in hedge funds there are generally some requirements that must be met such as income, and possibly minimal assets.

The proper definition of hedge fund is a company of any type that is a private investment company which operates within the exemptions that are defined in the Securities Act of 1933 as well as the Investment Company Act of 1940.

Many times hedge funds are created in the form of a limited partnership which allows a general partner to be appointed whom is responsible for managing the fund on a daily basis. This would make the investors able to be considered limited partners and able to reduce their own liability based upon the performance of the hedge fund. If there are multiple investors in the hedge fund the money is pooled into a giant fund and then all money is invested with the best investment options available to provide the greatest return.

It is also important to remember that hedge funds have a limit of no more than 100 private investors, remember hedge fund investors must be approved by the hedge fund manager and are not always able to invest simply because they want to invest. This means that it is entirely possible that you will not be able to locate a hedge fund that will accept you as an investor.

This does not mean that you will not be able to create your own hedge funds however and with proper advice from a financial planner you should be able to determine the best investment option for your own individual needs based upon your exact investment criteria as well as your financial status.

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