2/19/2023 0 Comments Top hedge funds![]() Candidates (Who Gets In): Private equity overwhelmingly attracts former investment bankers, along with some consultants and Big 4 and corporate development professionals hedge funds attract a more varied crowd, including investment bankers, equity research professionals, buy-side analysts at other firms, and sales & trading professionals.Fee Structure: Both firms charge a management fee on assets under management and take a percentage of investment profits (carry), but these percentages tend to be lower for HFs, and performance is measured a bit differently (NAV for hedge funds vs.Risk: All else being equal, hedge funds are probably riskier because they do not control the assets they trade, and it’s very difficult to beat, or even match, the performance of the public markets.But since hedge funds invest in highly liquid financial assets, redemptions tend to be much easier. Investor Lockup: Due to the long-term nature of their investments, PE firms often require their LPs to lock up their money for years.Investing Strategies: PE firms tend to become more involved their portfolio companies’ operations and business growth since they hold the companies for the long term (3-7 years) hedge funds focus more on short-term profits over 12-month periods from financial, rather than operational, sources.Types of Investments: PE firms tend to acquire entire companies using equity and debt, while HFs acquire very small stakes in companies or other liquid, financial assets such as bonds, currencies, commodities, and derivatives.
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