In investing, a side pocket is a segregated account within a fund that contains illiquid or difficult-to-value assets. Side pockets are used by hedge funds and other investment vehicles to isolate the illiquid assets from the rest of the fund’s holdings. The purpose of a side pocket is to allow the fund to continue to … Read more
The term “liquid alternatives” refers to a type of investment that is not traded on a public exchange. These investments are typically only available to accredited investors, and they can include hedge funds, private equity, and venture capital. Liquid alternatives offer a way to invest in assets that are not easily accessible to the average … Read more
Incentive fees are typically charged by hedge fund managers as a percentage of the profits earned by the fund. The fee is usually a performance-based fee, meaning that it is only charged if the fund generates a positive return. Incentive fees can vary widely, but typically range from 10-20% of profits. Incentive fees provide an … Read more
A relative value fund is a type of hedge fund that employs a strategy of investing in securities that are undervalued by the market. The goal of a relative value fund is to generate returns by taking advantage of discrepancies in the prices of securities. Relative value funds typically invest in a variety of securities, … Read more
A short hedge is an investment strategy that is used to protect against downside price risk. The basic idea is to take a short position in a futures contract or other derivative instrument, such as a put option. This offsetting position will gain in value if the price of the underlying asset falls. The key … Read more
A management fee is a fee charged by a company or individual for managing assets or providing investment advice. The management fee is typically a percentage of the assets being managed, and is charged by the manager on an ongoing basis. How do you explain management fees? Management fees are the fees charged by a … Read more
A hedge fund manager is an individual who makes investment decisions for a hedge fund. Hedge funds are private, unregulated investment vehicles that are only available to wealthy investors. Hedge fund managers must be able to identify and exploit opportunities in the financial markets in order to generate high returns for their investors. The term … Read more
LTCM was a hedge fund that collapsed in 1998 after sustaining massive losses. The fund had made large bets that the spread between different types of bonds would narrow, but when bond yields unexpectedly rose, these bets went sour. LTCM’s collapse sent shockwaves through the financial system and led to tighter regulation of hedge funds. … Read more
Window dressing is a type of financial statement fraud in which a company manipulates its reported financial results in order to make them appear more favorable to investors. The most common type of window dressing is known as “asset shuffling,” in which a company moves its assets around on the balance sheet in order to … Read more
An institutional investor is an individual or organization that invests large sums of money in securities, real estate, or other assets. These investors are usually banks, insurance companies, pension funds, or investment firms. Institutional investors play a significant role in the financial markets. They are typically big players in the securities market and can have … Read more
