Why are the top richest people in america involved with hedge funds.?

Question

Forbes magazine richest people had listed hedge funds as reason to their wealth. How ?

Answer 1

The real question is: why is a former ENRON exec walking around with money to invest in a hedge fund?

Answer 2

Hedge funds can invest in almost anything they like. They are not held to diversification rules like regular mutual funds. For example, hedge funds can be short(betting against some stocks) and long others. This allows them to typically earn higher rates of absolute return. They are also less regulated by the SEC. So because of these reasons, hedge funds attract the smartest people in the investment world to run them. The wealthiest people want the best managers running their money. You have to have a substantial amount of money to invest (in the millions, typically), and you can't take your money out frequently (often only once or twice a year). Most people on the Forbes list that are listed under hedge funds are usually managers or partners, and most of their net worth is in the fund. Management usually takes 1 to 2 percent of all funds under management, and between 25 and 35 percent of the gains. When you have billions under management, and the market has a good year, that amounts to a lot of money.

Hope this helps!

Michael Brisky
www.briskycapital.blogspot.com

Answer 3

Well, first off you need to be wealthy and an accredited investor to buy into a hedge fund. Then, hedge funds are successful because they can engage in complex investment strategies not available in traditional mutual funds. This is because they are not subject to the same level of strict government regulation by the SEC. Another example of government regulation hindering your prosperity.

Answer 4

they're greater richer than me. nicely think of a pair of one hundred million dollar portfolio, in lots of situations they cost a a million.25% "asset administration", than they cost a 20% on earnings. So it relies upon how nicely you carry out, in case you're up on the tip of the 12 months 20%, you're making 20millions, than you're taking for the portfolio administration team a million.25 tens of millions + 4 tens of millions. If the Hedge Fund basically is composed of two people it is 2.sixty 5 tens of millions for each, yet while the team is composed of seven or 10 individuals you have a stressful time to take a million on the tip of the 12 months, it continuously relies upon of the dimensions of the portfolio, how does it carry out and how a lot of people are responsible for it. maximum folk positioned their money on the portfolio so it could became much less stressful to have a 6 determine earnings on the tip of the 12 months do no longer assume to end college and be a Hedge Fund supervisor, besides the undeniable fact that they seem to be a number of their previous due 20's (+27)

Answer 5

Any time that your money is pooled with other investors over a broad range of stocks, it is safer. Single stocks are just like gambling in Vegas. Mutual funds have averaged over 10% returns for the last 70 years. Enron, Worldcom, Countrywide, etc can look really good until some story hits the papers and they are worthless overnight. That doesn't happen with most types of funds.

Answer 6

This is because they can afford to invest in hedge funds. Majority of people cannot afford to do this. Also, majority of hedge funds tend to require participants to have large sums of capital; many hedge funds also give better returns than our regular managed funds for everyone else. Keep in mind that hedge funds tend to be exposed to more risk/direct risk than regular managed funds, which is why they would not be recommended for people that don't have large sums of capital.

In essence, there are investments for rich people and investments for the rest of us. Hedge funds are investments for rich people.

Answer 7

Warren Buffet is listed as number two and he does nothing with hedge funds. Akaik, Bill Gates has nothing to do with hedge funds either.

What's your real question?