From the course: Understanding Capital Markets

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Hedge funds and private equity

Hedge funds and private equity

From the course: Understanding Capital Markets

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Hedge funds and private equity

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- [Speaker] Alternative investments have been increasing in prominence since the 1990s. So let's talk about them briefly so that you have a basic understanding of the different choices here. First of all, there are essentially a few different categories of alternatives. Probably, the most common or most well-known of these is what's called hedge funds. There's not a single strict definition of hedge funds, but one good definition that I like is any privately organized, loosely regulated, and professionally managed pool of capital that's not widely available to the public. What does characterize hedge funds though is that these are sold to a restricted set of sophisticated investors, meaning institutions and high net worth individuals. And this limits direct regulation. In particular, hedge funds can only sell themselves to what are referred to as accredited investors in the individual space or qualified institutional investors. Now, hedge funds manage concentrated portfolios of public…

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