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HEDGEDUCATION - FAQ


? Are there restrictions as to who can invest in hedge funds?
? What Types of Strategies do hedge funds employ?
? Who typically invests in hedge funds?


Are there restrictions as to who can invest in hedge funds?

Yes. Hedge Funds are restricted from accepting partners who are not " qualified clients." Presently, if you can meet one of the following criteria, you are an qualified client:
1. You have an individual net worth, or you and your spouse have a combined net worth, in excess of $1.5 million.

2. You had individual income, excluding any income attributable to your spouse, of more than $200,000 in the previous two years, and you reasonably expect to do the same this calendar year.

3. You and your spouse had joint income of more than $300,000 in the previous two years and reasonably expect to do the same in this calendar year. Institutions and pension accounts are subject to more complex criteria, and should consult an accountant.
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What Types of Strategies do hedge funds employ?

Every investment strategy in existence is probably used by at least one hedge fund, from the basic buy-and-hold to more esoteric strategies such as currency arbitrage or CMO derivatives. The majority of hedge funds are fairly straightforward, long-bias equity funds. Of these, most fall into the same categories one applies to mutual funds: micro- to large-cap, value, growth, momentum, etc.
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Who typically invests in hedge funds?

Qualified clients, institutions, endowments, fund of funds, family offices and pensions invest in hedge funds.
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