A hedge fund is an alternative investment vehicle that is comprised of an underlying pool of securities. Generally speaking, it is typically available to sophisticated investors – generally institutions or wealthy individuals.
Similar to a mutual fund, a hedge fund may invest in a number of securities, but there are several differences. First, hedge funds are not subject to SEC regulation like mutual funds. Because of this, hedge funds have access to invest in a wider range of securities, including more sophisticated – and sometimes risky – investments. Hedge funds may also invest in derivatives, such as futures or options, or other private placements, interest rate swaps and much more.
Another major difference between hedge fund investments and mutual fund investments is that if you try to get your money out of a hedge fund, the hedge fund manager can deny your request. If you are considering investing in a hedge fund, it is also important to note that the hedge fund manager is not under any obligation to tell you what the fund is invested in.
Hedge funds often contain quite a bit of very hard to understand information that may require a broker’s assistance, and just like any other investment, losing money in a hedge fund does not mean you have a case. If your loss doesn’t match your risk tolerance or if your broker failed to provide a full disclosure of the risks of your hedge fund, this may amount to hedge fund fraud and more.
Call a Los Angeles Securities Attorney Today
If your broker hedge fund failed to disclose material facts regarding your hedge fund investments, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney for a consultation today.