Financial Planning

Not everyone can invest in a hedge fund, and there is a good reason for this. Only those who are most wealthy or experienced in this type of investment may participate because it is not for those with small pockets (or faint hearts). Hedge funds invest in a broad range of items, including commodities like gold, stocks, and debt and they hedge risk through methods like derivatives and short selling.

A benefit to this rather risky type of investment is that the funds are exempt from many federal regulations that control other types of investment funds. Investment managers benefit from fund maintenance by receiving a performance fee. Investors benefit from different investment strategies designed to maximize their profits.

The biggest hedge funds on the planet each manage over $20 billion. JP Morgan has been the largest for two years running, managing an astounding $53.5 billion. Bridgewater Associates comes in an impressive second with $43.6 billion and Paulson & Co. ranks third with $32.0 billion. Paulson may have experienced the largest jump from 2009, rising from eighth place.

The fourth largest hedge fund, Brevan Howard, experienced a 2.3 percent loss to its $20 billion master fund during July. The company manages $27.0 billion in total assets, as does Soros Fund Management. Rounding off the top ten biggest hedge funds, in order of amount of money managed, are Man Group, Och-Ziff Capital Mgmt. Group, D.E. Shaw Group, BlackRock, and Farallon Capital Management.

Hedge fund managers have recently begun plowing money into the government bond market in the U.S. They now represent one-fifth of the trading volume on the U.S. Treasury Bond market, a substantial increase from the three percent share they held in 2009. This recent shift is a play to profit from the monetary policies of the U.S Federal Reserve, which have caused increasing volatility and inefficiencies regarding pricing.