How Exactly Do Most Hedge Funds Make Money?
Hedge funds earn from the fees they take from their investors for managing their money and also from the massive returns they generate by investing in various financial tools that are not readily accessible to the general public. Though the fees charged differs from one hedge fund to another, the strategies used to invest and generate returns are somewhat similar. To give you more clarity on this topic, here are 4 strategies that hedge funds commonly use to make money and generate massive returns for their investors and themselves - The bull and bear strategy - The hedge funds that use this strategy usually believe in being the bulls or bears of a trade. This means they would buy a position in the financial market if they see a particular asset having the potential to rise and similarly, open a sell position if they find an asset that is dropping in value. This is also applicable in the derivatives market with the help of a call or put option; these are essentially contrac...