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Hedge Fund Manager Essential to Fund Growth, Success

In the aftermath of the recent global financial crisis that has hit so many economies so hard, you will find that many hedge fund managers have taken steps to make changes to how they operate their funds. A hedge fund manager will make such changes with the intent of reducing the level of risk and also of improving their ability to bring in new investors to help grow their fund through additional capital.

A hedge fund is similar to a mutual fund in that each one is essentially a financial pool that holds the money of a number of investors. Managers will use the funds that are entrusted to them to invest into various financial instruments with the objective of making an attractive return for the investors of the funds. While it is true that anyone can start a hedge fund these days, it is also true that it takes a person with a keen understanding of the markets and an ability to balance risk in order to succeed in a hedge fund career.

A successful hedge fund manager with a good solid track record will never need to worry about a lack of funds to invest. Even though a hedge fund cannot be advertised nor can a fund manager solicit investors because of regulations, people with money to invest will always find a way to track down fund managers who know how to make money on a consistent basis.

Like any type of financial investment, there is uncertainty and instability in hedge fund opportunities. Originally, when these funds were started in the 1940s, they were intended as a means to mitigate risk and help to insulate investors from the ups and downs of traditional investments, such as stocks and mutual funds. Things have changed somewhat. These days more and more managers participate in more speculative investment methods and vehicles that have the potential to increase the hedge fund risks.

However, investors have the opportunity to shop around a bit for fund managers and funds that best fit their own tolerance for risk in investing. Those who are eager to invest in this type of fund would do well to check a hedge fund index to see how the fund they are most interested in has been performing compared to other funds.

While high returns are often very attractive and even tempting to investors, it should always be kept in mind that the risks will also be greater in order to gain those very high profits. Those who have a lower risk tolerance should look at hedge fund opportunities that have a track record of stable, moderate returns over a span of several years.

In today’s market, most hedge fund investments are considered to be “open-ended” pools. Under this structure a hedge fund manager is able to issue additional shares in the hedge fund they manage. This gives them the opportunity to raise more money for the fund without bringing in new investors, but simply by allowing current investors to increase their stake. If the fund is doing well, then most current investors are quick to buy up these extra shares as they become available.

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