Hedge funds are investments administered by licensed and accredited professionals by pooling funds and then investing the capital in securities and other ventures. Most are structured as limited partnerships or similar vehicles. Their leverage is capped by regulating authority unlike mutual funds. Hedge funds are not available to the general public as only accredited investors are allowed to invest in them. Their operations are flexible as compared to mutual funds. Hedge funds bypass some licensing requirements and oversight from regulatory body.
In the recent past, fund managers have gained a lot of popularity becoming the one of the best investment vehicle all over the world. They are normally open-ended hence an investor can withdraw or add investments whenever needed provided it is within the required time. Due to financial crisis witnessed in 2007-2008, the U.S. and Europe tightened some of the loopholes and gave regulatory more oversight powers on fund managers.
The main aim of hedge funds is to achieve good returns on investment whether the market condition is good or bad. Indeed, fund managers normally invest their own cash as other investors thus showing their commitment and dedication towards the success of the hedge funds. Investors are allowed to invest their money for at least one year before making any withdrawal. Investment managers are paid annual management fee as a percentage of assets under management and also performance fee at a certain percentage rate of new investors who have joined the fund.
Hedge funds are structured in a unique way to utilize and venture in specific investment opportunities available. Depending on their field of specialty, their strategies normally differs when exploring market conditions. Money invested in hedge funds are withdrawn only on specific intervals such as quarterly or bi-annually. A hedge fund will use certain strategies to enable it achieve the targeted goals. Most investments made by hedge funds are speculative in nature hence they can go either way. However, due to their experience they are able to explore the market condition and venture into investments that would yield positive return on investment within the shortest time possible.
One of the most recognized fund managers is Kenneth Griffin from valuewalk. He established Citadel LLC a global investment company. The company was estimated to have $25 billion in investment capital. Citadel LLC is among the biggest alternative investment firms across the world. Mr. Griffin has ensured the success of this company due to his experience in this industry. In 2012, Griffin was identified by Forbes as the top earning fund manager across the continent.
Ken Griffin has played crucial role of giving donations to various institutions in Chicago. Together with his wife, they established a foundation that has contributed millions of dollars to other institutions like Children’s Memorial Hospital and others. Through Citadel LLC, he has donated to Art Institute of Chicago and Chicago public Library. All these contributions he has made are for supporting the community that has played major role towards great success he has achieved.