Definition of Hedge funds Names
Hedge funds names refer to the different companies that pool/vehicle of investment structure by a registered investment advisor or a money manager designed to receive a return. The structure briefly recognizes a limited liability company or limited partnership. They are complex and are heavily diversified.
Hedge Funds holds both short and long stocks because of which the risk management reduces. As a result, investors make money despite market fluctuations. However, the funds serve rich investors due to the fees charged and higher risks involved compared to other investments.
Also, hedge funds names are not necessary to get registered with SEBI (Securities and Exchange Board of India), with our market regulators or disclose NAVs during the day end. Whereas, the other mutual funds follow the regulatory requirements.
Features of Hedge funds Names
Hedge funds in India are comparatively new in the Indian market which started in 2012 when SEBI allowed alternative investments funds. Therefore, the following are few features regarding the same:
- Diverse portfolio
- High net worth investors
- Higher risks
- Higher fees
- Tax regulated
How does a hedge fund work?
Hedge funds invest in debt, bonds, real estate, currencies, convertible securities, derivatives (futures and options) equities because of which they use different types of trading techniques. Different hedge funds names are relying on the strategies to manage them and the securities they invest in.
For hedge fund example, to trade with debt and equities, the trading technique can be to operate in the stock market or purchase directly in a private placement from the company.
However, there lies an obligation to purchase or sell an underlying stock at a predetermined rate in the case of derivatives with futures. Whereas, with options, the scenario remains the same just without an obligation. As a result, securities investment of such kind diversifies trading methods.
Types of Hedge Funds
There are 3 types of hedge funds names :
- Fund of funds: These are majorly the mutual funds that invest in another hedge fund rather than individual securities. It briefly explains that one fund invests further in other types of funds containing various underlying assets rather than directly going for stocks or other securities.
- Offshore hedge fund: Preferably established in a low taxation country, an offshore hedge fund is formulated outside our own country.
- Domestic hedge fund: As the name suggests, these types of hedge funds are only open for investors that are subject to the taxation of the origin’s country.
- Standalone Funds: These types of hedge funds are individual funds where the entire investment is made by investors where the fund manager will divert the funds from the standalone itself. Also, they are easy to report but do not get tax benefits.
Different Strategies of investing Hedge Fund
A hedge funds names can also be differentiated by the strategies adopted by its fund managers to maintain funds which sometimes makes it higher on the risk management rack.
- Market neutral: Market neutral funds often seek to minimize market risks. Moreover, it includes long and short equity funds, convertible bonds and fixed-income arbitrage.
- Event-driven: It refers to the situation where investment is done to take advantage of corporate events price movements. Also, For hedge fund example, distressed asset funds and merger arbitrage funds
- Arbitrage: The word defines purchasing security from security market trading at a low price and selling it in a higher price market for some profit. However, exchanging very high correlated securities( asset class or multiple ones) simultaneously when markets move sideways for some profits is known as relative value arbitrage.
- Short/Long selling: By literal meaning, short selling refers to the selling of security without actually buying it but with a notion to purchase it at a predetermined future price and date. The investor expects the share price to drop on the future date and book profits.
- Market-driven: These funds also advantage from the global market trends. Moreover, Hedge funds in India under prime brokerage accounting note the global macros and the way it impacts equities, interest rates, currencies and commodities.
Note: The fees include both profit sharing ( varying from 10-15%) and management fees which is generally less than 2%. The minimum amount to invest in a hedge funds names is 1 crore per investor while the entire fund has to be at least a corpus of 20 crores.
Top hedge funds
Following are 10 top hedge funds names that are based on AMU ( total assets under management) dominating the area.
A New York-based quantitative hedge funds names using statistical and mathematical methods that cover technical indicators driving the company’s automated trading strategies. Moreover, The company apply these trading strategies to international equities and U.S, futures contracts, foreign exchange, debt instruments and forward contracts.
In 1982, a mathematician founded Renaissance Technologies. Jim Simons, the founder is the 68th wealthiest person according to the Forbes list in the world on 13th Jan 2021 with a worth of $23.5 billion.
The company provides services to foreign governments, pension funds, charitable foundations, university endowments, central banks and other institutional investors, based in Westport, Conn. Moreover, The Bridgewater Associates offers funds like:
- All-Weather, using asset allocation strategy
- Pure Alpha, targeting active investment strategy
- Optimal Portfolio, combining aspects of all-weather funds with active management
- Pure Alpha Major Markets, focusing subset of opportunities that Pure Alpha invests
Co-chief investment and Co-Chair officer founded the firm in 1975, with a fund worth $138 billion under management as of 30th April 2020.
AQR Capital Management
This kind of top hedge funds names uses quantitative analysis to develop financial models focusing on momentum investing and value. Moreover, This company implements the strategies through mutual funds, a kind offered in Europe termed as Undertakings for Collective Investment in Transferable Securities, to manage accounts and sponsor funds.
AQR is based in Greenwich, Conn and launched its Absolute Return Fund in 1998, August with $143 billion under management as of 31st March 2020.
The Man Group has 230+ years of trading experience making it under the top hedge funds list. The company initially started as an exclusive supplier of Rum and later got into the coffee, cocoa and sugar trading business. As a result, it has $117.7 billion under management as of 31st Dec 2019.
This kind of top hedge funds list company provides discretionary advisory services to private funds. The Millennium Management was founded by Israel Englander following a career as a trader, specialist on American Stock Exchange and floor broker in 1989. Therefore, the company has $42 billion as assets under management on 31st Dec 2019 based in New York.
Two Sigma Investments
The Two Sigma Investments uses quantitative analysis to create mathematical strategies determined on historical price patterns and other data. Also, The company was founded in April 2002 based in New York. It had $66.14 billion under management on 31st Dec 2019 to count under the top hedge funds list.
This kind of top hedge funds is an investment manager handling trillions of assets. The BlackRock financial management started in 1994 while the fund’s advisors and largest BlackRock entity founded its operations in 1984. The company is New York-based which used to handle $687.64 billion as Blackrock advisors.
This type of hedge funds list describes their investment as encompassing and extremely broad in hedge funds names with almost every asset type like equities, arbitrage positions, distressed securities, real estate-related securities, commodities etc.
The company acquired bookseller Waterstones and Barnes & Noble. Whereas, Elliott Management was founded by Paul Singer based in New York in 1977. Moreover, the company holds $73.5 billion under management on 31st Dec 2019.
Davidson Kempner Capital Management
The company initiated as hedge funds names by managing investor’s capital. Davidson Kempner focussed on convertible arbitrage, bankruptcies, event-driven equities, restructuring situations and distressed investments.
It is also a New York-based company with affiliate offices in Hong Kong, London and Dublin. Moreover, Kempner has $33.1 billion as net assets under management and %35.9 billion under management as of 31 Jan 2020.
Citadel Advisors as hedge funds names focused on commodities, credit and quantitative strategies, equities, macro and fixed income. The founder of Citadel started in 1990 based in Chicago. Also, as hedge funds names the company has $28.89 billion as assets under management on 31st Dec 2019.
Hedge funds vs Mutual funds
Talking about hedge funds vs mutual funds, we first take into account a brief of their similarities. Both mutual funds and hedge funds names are built from pooled funds and are managed portfolios. Also, They target achieving returns through diversification.
The pooling of funds explains that a manager of a group of managers uses investment from multiple clients to invest in securities available in the market that fulfil their objectives or strategy.
Mutual funds are an offer by institutional fund managers with different options available for institutional and retail investors whereas hedge funds names target high-net-worth investors. They require that the investors meet accredited characteristics.
Discussing hedge funds vs mutual funds or the dissimilarities are as follows. However, the major difference can be that mutual funds are high accessible whereas hedge funds in India are not.
Mutual funds can be easy to use for the general public since the minimum amount can start from Rs. 500 as well which is way too high in the case of hedge funds. Also, there are specific groups only that are allowed to invest in hedge funds names. Therefore, the discussion explains in detail hedge funds vs mutual funds.
Distinguish between them
|Basis||Mutual funds||Hedge funds|
|Definition||Mutual funds pool from the investors their savings to prepare a group of securities at attractive costs.||Hedge funds are accounted as a portfolio of investments where investors pool their money to buy assets.|
|Investors||Limited disposable income of retail investors||Firms and individuals with high-risk appetite and net worth.|
|Management style||Line with objectives and less aggressive||Highly aggressive|
|Performance fees||Charged as a percentage and based on assets managed||Depends on performance|
|Transparency||Regular disclosure on the performance of assets and annual reports.||Information is disclosed to the investors only.|
|Regulation||Exchange regulates the mutual funds(like SEBI in India)||Limited regulation|
|Fund manager||No compulsory involvement||The required investment of personal money|
Explanations for Hedge funds vs Mutual funds
The main idea of mutual funds is to offer returns over the risk-free rate of return, which is given by the market. However, hedge funds in India provide maximum possible returns from the investment made by the clients that count as the key point in mutual funds vs hedge funds.
Secondly, a mutual fund is a vehicle in which funds are gathered from various investors hold by the fund manager for buying basket securities from the stock market. While in hedge funds names only a few investors are allowed to contribute to buying the assets and are termed as a portfolio of investments.
Thirdly, the investors for mutual funds are retail clients or common man who diversify their limited disposable income in them with a motive of growing their funds. While hedge funds names include individuals with a huge appetite for risk with a desire for high returns in a short span.
Forth, those serving the mutual funds do not hold a substantial interest in the working of the fund. Whereas the ones serving hedge funds names should compulsorily have a large share in the corresponding fund. This usually executes to generate a level playing on the field and prevent any detrimental decisions to the overall interest of the fund.
Fifth, mutual funds need to be strictly regulated by the SEBI or Securities Exchange Board of India of the corresponding country which is not in the case of hedge funds names.
Sixth, the mutual funds need to completely publish their annual reports or balance sheet yearly along with a quarterly performance of assets. The disclosures also have to be made public in addition to a statement being sent to all investors. Although the hedge funds names have to disclose only to established investors without any public step to be followed.
Fees paid for the management for mutual funds lies on the percentage of asset managed while for hedge funds names it depends on the performance of assets.
The mutual funds may start with a minimum amount of Rs 500 while hedge funds names need $10 million for each investor.
Next, the mutual funds can be redeemed easily (open-ended funds) since the invested amount is less. Whereas hedge funds names have a long lock-in period like three years because of which redemption becomes difficult. Furthermore, The redemption carries in blocks with a condition saying 100% amount cannot redeem.
The mutual funds have a secondary market that allows customers to sell their units to customers and liquidate without the need of actually paying back the fund. While hedge funds names there is no active secondary market since the units are exclusive.
Lastly, the mutual fund’s manager has to stick to the strategy agreed upon at initiation while hedge funds names allow making changes since they are aggressive.
Hedge Funds for Dummies
The Hedge funds for dummies explain how to find a good prime broker account, all types of funds, exploring their pros and cons as an investment and many more. Hedge funds for dummies have an author who is a hedge fund specialist and a financial writer. Also, It is a friendly guidebook covering bases for all levels of investors. There are answers for any kind of investor, building a first portfolio or who have been there for years:
- Definition of hedge fund and what can it do
- Hedge funds structured
- Calculation of investment return and risk
- Developing hedge funds names strategy
- Finding fund performance
- Long and short-run tax issues
- Profiting and monitoring on macroeconomics trends
It further contains sample portfolios, giving point to point information regarding various other aspects that helps to invest wisely. Therefore, hedge funds for dummies regard as the perfect source for all those who have an interest in hedge funds names.
Hedge funds names are termed as alternative investments that use methods like short-selling, speculative strategies and leveraged derivatives to earn a return.
Also, They impose $1 million as minimum investment and targets high net worth institutional investors, pension funds and individuals. They are, however, different from mutual funds with a variety of hedge funds names on the list having greater risk than traditional investments.