4. A friend has suggested that you should consider investing in
an equity hedge fund because...
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4. A friend has suggested that you should consider investing inan equity hedge fund because the fund may achieve returns higherthan the share market. (LO 3.6) (a) Describe how a hedge fund isstructured, including the manager, investors and types ofinvestment (b) Explain how a hedge fund may use leverage strategiesto achieve higher returns. Give an example.
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a i Hedge funds may be offered and managed by individual managers or financial institutions particularly investment banks Individual managers usually have a very high profile and an established reputation in the financial markets Similarly investment banks employ individuals with specialist skills ii The hedge fund sector is generally divided into singlemanager hedge
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