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4. A friend has suggested that you should consider investing in an equity hedge fund because...

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Finance

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    See Answer
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