Hedge-like Mutual Fund
What it is:
How it works/Example:
Hedge funds are capitalized by and available only to individuals with high net worth. Hedge funds employ aggressive investment tactics and are not subject to strict regulation by the Securities and Exchange Commission (SEC).
By contrast, mutual funds are SEC regulated and available to all investors, regardless of net worth. Hedge-like mutual funds are a hybrid of the two because they seek growth and income using tactics typically employed only by hedge funds.
Why it matters:
Hedge-like mutual funds are a viable alternative for investors who would like to invest in hedge funds but do not meet the net worth requirements. In addition, the regulation of hedge-like mutual funds reduces risk by limiting the amount of portfolio leverage allowed. It is important to note that the fees associated with investing in hedge-like mutual funds is likely to be much higher than the fees for more traditional mutual funds.