Hedge funds may invest in a spectrum of assets designed to deliver beyond market returns, commonly labelled as alpha.
However, overperformance is not guaranteed, and hedge funds can see incredible shifts in returns, sometimes underperforming the market by a significant margin.
Typically only available to accredited investors, these vehicles often require high initial investments of $1 million or more. They also tend to impose individual net worth requirements.
Hedge fund investments may tie up an investor’s money for substantial time periods.