Characteristics:
Hedge fund managers enjoy particular freedom in their investment policy. Strategies vary considerably, ranging from funds geared to the utmost security to others that seek maximum returns and carry a commensurate degree of risk. Hedge fund managers often work with innovative investment concepts they have developed themselves, which is why a hedge fund is only as good as the person managing it.
Opportunities:
Hedge funds can generate attractive long-term returns. They have a relatively modest level of price fluctuation and mostly pave the way for positive returns, even in bear markets. Overall, hedge funds stabilize portfolios and enhance their risk-return characteristics.
Risks:
Since hedge funds are subject to fewer regulatory restrictions than traditional investment funds, they can entail risks that are difficult to capture using standard risk measurements.
How do you go about investing in hedge funds?
Private investors basically have two vehicles at their disposal: they can invest in an individual hedge funds or in a fund of hedge funds, the latter comprising a variety of individual hedge funds. Diversified fund of hedge fund investments offer considerable advantages compared to a direct investment: they invest in a range of different investment strategies and often use various managers. This diversification leads to enhanced risk-return features. As a leading provider, UBS can offer you a wide range of fund of hedge fund solutions to choose from.
