Hedge Funds are a complex investment product but they are effectively an all-encompassing term for a range of different investment strategies with varying levels of risk attached to each one.
There are a few things to know before considering investing in a Hedge Fund. Firstly, the initial investment required is often far higher than any other investment product on the market. Hedge Fund companies will typically demand an investment of £50,000 at least with some requiring up to £1 million or more to get the ball rolling.
Secondly, annual management fees are usually in the region of two per cent. This is not unheard of for investment funds but given the sizeable amount of capital involved this can be a lot of money.
Hedge Funds also impose performance fees of up to 20 per cent on any return, something that you don't commonly see with investment products and is aimed at motivating investors and fund managers alike. Given the high risk nature of Hedge Funds it is vitally important to think long and hard before investing and seek professional financial advice.
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