What is a hedge fund | Amazing advantages of hedge fund

Today we will tell you what is a hedge fund, how it works, how it gives returns, and how you get more profit in it? This is what we will tell you today. Because you must have heard about mutual funds, you must have heard about the stock market as well, but apart from all this, there is also a third type of investment which is better, more secure and gives bigger profits than them, which is called hedge fund. In this you can gain very good profit.

People all over the world make various types of investments to increase their income and security. And always keep on investing.

There is a simple principle of the market. Less investment, less risk, less profit and more investment means more risk and more profit.

Many people consider investment in the stock market as a very good way of making good profit in investment. In which there is high risk as well as high profit.

We have seen many such examples. In which people put their lifetime earnings in the stock market in the greed of more profits because at that time the market was going up very fast. And left his job to do full involvement in the share market. And invested all the earnings in the stock market. And suddenly the market went down due to which a huge part of his capital was wasted and he suffered a lot.

Which was a big blow for him. In this way, along with high risk and high profit, there can be big losses in the stock market. There is a lot of risk in that.

Because the Share market is full of risks and volatility is very high. And in that you are responsible for regulating your own capital. The decisions in that are your own.

And those who do not have much capital for investment. And those who want profits too. They consider mutual funds as a better investment option. Because it can be started with very little capital. But mutual funds do not get as much profit as other means of investment such as property and investment in the stock market.

Usually, returns of around 10%-12% are available in mutual funds. And it is also subject to market. In this, if you invest through SIP, then there is little risk. And in this, investors’ money can be invested only in a limited number of places.

But you should also pay attention that the hedge fund managers’ background should be solid. So use always the good hedge fund managers.

What is a hedge fund–

But apart from these, there is also a third type of investment and that is investing in hedge funds. Which we consider to be the best investment. But it requires large investments. But it has less risk and higher profits than the stock market.

Because there is no limited investment scope in this and hedge fund managers can invest your money in any such place from which you can get big returns, they can earn profit by buying a property at a time when its rate is very low and when the property gets good prices, then they can increase your profit by making a good profit.

Apart from this, they can invest your money in many other sectors like land, real estates, stocks, derivatives, commodities, equities, money, coins etc.etc… Their investment strategies are quite comprehensive to give good returns to the investors. That is, they can invest your money in every place in which they can increase your porfit. It just has to lock your money in a hedge fund for a limited time. You cannot withdraw your money before that and if you do so then you may have to pay more charges.

The simple thing is that investing in hedge funds does not require you to regulate your investments yourself. Rather, big hedge fund managers do all this work for you. In this the risk is low but the profits are high.

Hedge fund managers can withdraw money from any sectors at any time and invest your money in any other sector, it does not have any investment constraints like stock market and mutual funds, so they freely take decisions with their full discretion. Because most of them get good profits. Sometimes they give profits to the investors even when the stock market goes down.

The only draw back of this is that you cannot invest in hedge funds with small capital. For this, usually around Rs 1 crore is required. If the hedge fund manager is good, then he can give you better profits.

Now let us understand hedge fund with an example.

Suppose there is a person named Rajiv Singh, he got about 6 crores from selling his property. Now he wants to open a factory for Rs 4 crore out of it and wants to invest the remaining two crore somewhere. Know about Rajiv Mutual Fund. And they know very well that they will have to pay a good commission to invest in mutual funds. And mutual funds can invest your money only in limited places.

Apart from this, if they invest in the stock market, then the risk in it is very high. Then a friend of his advised him that he could invest his money in a hedge fund. There is risk in hedge funds but profits are also significant. And even in the downfall of the market, the hedge fund can give good profits because there are no investment limits in the hedge fund. They can invest your money in any right place where you can get good returns.

Hedge fund means putting lines of bushes in the field so that no one can damage your ground. Similarly, the purpose of hedge funds is also to reduce the risk of the market. Their purpose is to save your money from market losses. That’s why it is named hedge fund. It started with America in 1949.

Now let us try to understand the same thing with our second example.

Rajeev bought shares worth ₹200. Because there is a lot of risk in the stock market. Sometimes the market gives very good returns. Sometimes the market brings a lot of losses. To avoid this, Rajiv made a contract with someone that after 1 month Rajiv wants to sell those shares to them at the rate of Rs 190 per share. For this Rajiv is ready to pay them a premium as well. Which is called put option.

This gave Rajiv the advantage that he reduced the risk of his investment money to a great extent. Now if the stock market goes down on that fixed date, then they will get the price of ₹ 190 for those shares.

This means that even if the stock market had gone down by that date, Rajiv would have lost only Rs 10 per share. But if the stock market goes up on that fixed date, let’s say the shares reach Rs.250 at that time, Rajiv is not obliged to sell those shares for Rs.190 as per the contract. He will sell it for Rs 250 only. That is, he reduced his risk in this, but if there was a profit, he took a good profit.

Fees of Hedge Funds – Be it good or bad, hedge funds charge fees ranging from about 1% to 2% of investments, and hedge fund managers usually charge around 20% of the profits from their investments as fees. take.

Advantages-

It is fully capable of giving you returns in both the situations whether the market goes up or down, provided the fund manager is good.
Its objective is to identify the market and make the best use of the opportunity.

What are the precautions to be taken before investing in Hedge Funds?

But before investing in hedge funds, it is very important to choose a good hedge fund manager. Whose previous record is very good.

Draw back-

Not everyone can invest in Hedge Fund because a minimum investment of Rs 1 crore is required in it. But there are many hedge funds out there that invest in hedge funds in very low currency.

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You can use the services capitalist Explits a world class hedge fund manager.

Conclusion-

Our purpose of writing this article, what is a hedge fund, is that you should not be limited to the stock market and mutual funds for investment, but increase the scope of your investment. So that you can earn maximum profit.

If you have more money, we recommend that you contact a hedge fund manager who has given very good returns to their investors and who can increase your money so that you can get maximum protection.

Hedge fund investment cannot be started with a small amount of capital like mutual funds and shares, but it requires a lot of money, but it also has risk, but it is not as risky as the stock market because the scope of investment in it. gets very big.

Therefore, if you have the money to make a big investment and you can take the services of a good hedge fund, then you can earn more profit from the stock market and mutual funds. So friends, you will definitely tell us how you liked this article of ours, what is a hedge fund.
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