FRM Financial Risk Manager Practice Test

A hedge fund is an investment fund available to a limited range of investors that is permitted by regulators to undertake a wider range of investment and trading activities than other investment funds. A hedge fund has to pay a performance fee to its investment manager.

Key Takeaway: Hedge funds are normally for the super rich and sophisticated investors, who possess great investment knowledge. By law, these investors must earn a minimum amount of money every year. Their net worth must be more than S1 million in order to become members of a hedge fund.