An exotic form of mutual fund reserved for only sophisticated and wealthy corporations and individuals, hedge funds in Hong Kong are used for earning profits regardless of market conditions whether bullish or bearish. These funds are mostly unregulated and comprise of less conventional trading activities and strategies such as short-selling. These types of strategies are not available to mainstream mutual funding. Its history goes way back to 1949 when it was first attempted by Alfred W Jones. He tried to compensate the risk of purchasing stocks by short-selling them. To do that he also increased his portfolio’s leverage. The hallmarks of modern day hedge funding are short-selling and leverage.
Functions
As discussed above this type of funding allows fund holders to earn profits irrespective of how the market is functioning. If the manager of funds feels that real estate is a better investment option than stocks or commodities, he will instantly put money in real estate. However, if he thinks that the market is dropping he will go with short selling to play the downward movement to his own advantage. No type of investment deems too exotic to the hedge fund managers whether it is a financial derivative or any other item.
Investing in hedge funds is becoming a common practice in Hong Kong considering it a fast growing economy. If speculative figures are to be believed than this market is supposed to be of almost two trillion dollars of worth. The figure continues to fluctuate quite chaotically than mutual fund market since it is always going through quick rise and falls. It should be duly noted that this type of funding is only for extremely wealthy individuals and establishments. Most of the funds require an initial investment of around one million dollars or more than that.
Functions
As discussed above this type of funding allows fund holders to earn profits irrespective of how the market is functioning. If the manager of funds feels that real estate is a better investment option than stocks or commodities, he will instantly put money in real estate. However, if he thinks that the market is dropping he will go with short selling to play the downward movement to his own advantage. No type of investment deems too exotic to the hedge fund managers whether it is a financial derivative or any other item.
Investing in hedge funds is becoming a common practice in Hong Kong considering it a fast growing economy. If speculative figures are to be believed than this market is supposed to be of almost two trillion dollars of worth. The figure continues to fluctuate quite chaotically than mutual fund market since it is always going through quick rise and falls. It should be duly noted that this type of funding is only for extremely wealthy individuals and establishments. Most of the funds require an initial investment of around one million dollars or more than that.
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