Part 3 of a 3 Part Series

What is a hedge fund?

A hedge fund is a fund, usually used by wealthy individuals and institutions, which is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, arbitrage, and derivatives. Hedge funds are exempt from many of the rules and regulations governing other mutual funds, which allow them to accomplish aggressive investing goals. They are restricted by law to no more than 100 investors per fund, and as a result most hedge funds set extremely high minimum investment amounts, ranging anywhere from $250,000 to over $1 million. As with traditional mutual funds, investors in hedge funds pay a management fee; however, hedge funds also collect a percentage of the profits (usually around 20%).

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Part 2 of a 3 Part Series

What exactly is an “angel investor”?

Entrepreneurs who launch smaller-scale enterprises know that commercial banks generally don't lend funds to ventures with little or no assets, customer base or sales track record. And venture capitalists typically work with business concepts that are already up and running with the potential for multimillion dollar revenues. Many of the owners of smaller firms have heard that “angel investors” can provide funding and even some much-needed expertise and referrals for these in-between business deals. So who are these people and what kinds of investment terms can owners expect?

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