The viability of Hedge Funds as reliable retirement vehicles

The viability of Hedge Funds as reliable retirement vehicles

Table of Content

Serial Number and Heading Page Number

Abstract 02

1 .0 Overview 04

2 .0 Hedging 05

2 .1 Hedge Funds 07

2 .2 Funds of Hedge Funds 10

2 .3 Protection and Hedge Fund 11

2 .4 Hedging with the cash market 12

3 .0 What are the benefits of a Hedge Fund ? 14

4 .0 How do Hedge Funds compare to the top retirement vehicle 18

4 .1 Hedge Fund Advisers and the Investment Advisers

Act 24 4 .2 Data on top hedge funds over the last 5 years 26

5 .0 Knowing your Hedge Funds 33

5 .1 Hedge Funds and the Securities Exchange Act of 1934 34

6 .0 Pension Plan and Other Institutional Investment in Hedge Funds 37

End Notes to Page 24-26 39

7 .0 Conclusion 42

8 .0 References 46

Abstract

Hedging practices restricted volatile market trends in supply and prices through pre-planned buying patterns . This could be used as a tool to manipulate risks arising out of price fluctuations and uncertain deliveries . Companies employ strategies different from one another to beat price escalation and uncertainties of supply . Flexibility in contracts between producers and buyers can be viewed as an option Hedging strategies is another . Time-tested procurement methods are another . We have seen that many companies that ventured into this highly volatile business had to close their operations and declare bankruptcy to avoid further hardships

With globalization and liberalization , many countries become hotspots for investments . Major conglomerates took advantage of this , and saw it as an opportunity to elicit more profits . Cheap labor and local government subsidies could bring more sales and profits . They could also use the cheaper production costs to beat global competition . China and India are two developing nations that has benefited from liberalization China became a major destination for investors in the late 70s , when Communist China opened its skies to attract FDI . India followed much later , as late as the 90s . However , both these countries are giving the developed nations a run for their money with massive developmental schemes and success . China is currently the world 's leading exporter of products and India is not too far behind

US-based hedge funds are investing in projects the world over . This is particularly so in rapidly developing economies such as China , India and Brazil . What are hedge funds ? Hedge funds , like mutual funds , is the accumulation of funds collected from investors , to use in buying stocks and bonds in those countries where the company seems confident of drawing high returns for their investment

Unlike mutual funds , hedge fund managers take very little risk and invest in long and short positions in assets to lower portfolio risk arising from uncertain market movements due to the countless external factors

So , how does a hedge fund operate and how do fund managers overcome market unpredictability to maintain financial security on their investments

Due to its unpredictability , a hedge fund is invested...