Hedge funds try to make up for their enormous fees by using either esoteric investments or excessive leverage. They use huge amounts of investor capital to achieve an advantage that average investors believe they cannot muster on their own.
Hedge funds get into situations such as short selling and derivatives and unusual techniques. They get involved with leveraged buyouts and exotic business ventures.
Uncertainties are much higher. Too high, in relation to the potential gains. The hedge funds really do not compensate their investors for exorbitant risk.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
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