Investopedia defines and explains the “Hedge Fund Manager”
The individual who oversees and makes decisions about the investments in a hedge fund. Managing a hedge fund can be an attractive career option because of its potential to be extremely lucrative. To be successful, a hedge fund manager must consider how to have a competitive advantage, a clearly defined investment strategy, adequate capitalization, a marketing and sales plan and a risk management strategy.
Individuals wishing to invest in hedge funds must meet income and net worth requirements. Hedge funds can be considered high risk because they pursue aggressive investment strategies and are less regulated than many other types of investments. The hedge fund manager is responsible for the investment decisions and the operations of the fund.
Investopedia’s tutorial on “Hedge Funds”
Although hedge funds usually get negative media focus, many hedge funds are actually very good investments and can be an integral part of a well-diversified portfolio. But what exactly is a hedge fund, and what are some of the factors one should know about hedge funds before making an investment? In the following tutorial, we’ll introduce basic hedge fund characteristics and strategies as well as some simple guidelines for evaluating hedge funds. By no means should this tutorial form the basis of any due diligence process for investing in hedge funds, but it can serve as a guide leading to more fruitful conversations with an investment manager that has experience with these vehicles.
Hoover’s overview of the “Hedge Fund Management” industry
Excerpt from Hedge Fund Management Report
Companies in this industry manage clients’ assets for fees based on the performance of investments. Major hedge funds include DE Shaw, Greenlight Capital, and Steel Partners (all based in the US), as well as Fauchier Partners and Man Group (UK) and ABC arbitrage (France).
Demand for hedge fund services is driven by the growth of investment capital managed by institutional investors. The profitability of individual funds depends on investment expertise. Large funds can more easily participate in big financial transactions. Small funds can compete effectively through specialized investment strategies. The US industry is capital-intensive.
Products, Operations & Technology
Hedge funds operate much like mutual funds, but are also able to trade financial derivatives and to take “short” positions, in which investors sell borrowed shares of stock in anticipation of a decline in value, and buy them back at a profit. In contrast, mutual funds can own only registered securities such as stocks and bonds. Hedge funds typically specialize in a particular type of investing, such as stocks, bonds, commodities, futures contracts, distressed securities, mergers and acquisitions, arbitrage, or investing in other funds.