Funds: Hedge and Mutual- Who and What They Are Essay

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Funds: Hedge and Mutual- Who and What They Are Ever since their creation in 1949 by A. W. Jones, hedge funds have been widely regarded as a unique and luring alternative to investing ones money. Some have seen them as a replacement to the well-known mutual fund- while others believe that they are an entirely new domain. Besides defining both the hedge fund and mutual fund, this paper aims to expose the answer to a deeper question: Are hedge funds REALLY different than a mutual fund, and if so, how and why? By comparing both financial intermediaries in the areas of structure, strategy, and their respective environments, it is my hope that I can unmask any uncertainties that may reside within these financial institutions. The most…show more content…
Most importantly the act requires the disclosure of their financial condition and INVESTMENT POLICIES when the stock is sold, and continually on a regular basis. On the other hand, hedge funds are not registered, and are, as previously mentioned, private investment “pools.” For the most part they are exempt from the regulation by the SEC under the federal securities laws. Unlike many of the limits imposed on mutual funds, hedge funds are granted a great deal of privacy. They aren’t required to disclose investing strategies, composition of their portfolios or performance besides what the company willingly presents. Undoubtedly this allows hedge funds more of a decisive edge to plan and implement further internal and external tactics to better optimize their institution. [Source: IMF] In analyzing both hedge and mutual funds, is it also important to look at the advantages, and implicit disadvantages, from the managers point of view, and not only the investors point of view. One major difference that cannot be ignored is the difference in fees. In this category mutual funds present a major disadvantage as they are allowed to impose only certain fees under the limitations of specific guidelines. An example of this that federal law requires them to act out of a
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