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How do hedge funds differ from traditional investment funds?

Curious about hedge funds

How do hedge funds differ from traditional investment funds?

Hedge funds differ from traditional investment funds, such as mutual funds or exchangetraded funds (ETFs), in several ways:

1. Investment strategies: Hedge funds typically use more complex and highrisk investment strategies, such as short selling, leveraging, and derivatives trading, compared to traditional investment funds that usually follow more conservative and diversified strategies.

2. Accessibility: Hedge funds are typically open only to accredited or highnetworth investors, while traditional investment funds are open to a wider range of investors.

3. Regulation: Hedge funds are subject to less regulatory oversight than traditional investment funds, which are required to follow strict disclosure, reporting, and operational rules.

4. Fees: Hedge funds charge higher fees compared to traditional investment funds, typically a management fee (usually 12% of assets under management) and a performance fee (usually 20% of any profits earned by the fund).

5. Liquidity: Hedge funds may have lower liquidity compared to traditional investment funds, meaning that investors may not be able to quickly and easily withdraw their investments from the fund.

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