GLOBAL INVESTMENT

Global investment management, or generally more familiar with the term hedge fund is a private collective investment contract subject to performance-based compensation costs (performance fee) and is typically offered in limited to upper-class investors. In the U.S. hedge fund offered only to accredited investors only, and because of this restriction, the hedge funds are exempt from the rules of the SEC, NASD and other regulatory agencies.


Hedge fund activity is restricted by a treaty which governs the management of special funds, so hedge funds can implement complex investment strategies, conduct transactions "long" or "short selling" assets, conduct trade transactions futures, swaps and other derivative transactions or . Hedge funds often do well as hedge their investments against equity and stock price movements, because their main target is to produce returns that are not closely related to the financial markets in general.


In many countries, hedge funds are prohibited from marketing their services to investors who are not accredited do not like the rules on retail investment funds such as mutual funds and pension funds. This hedge fund is a joint asset management company that conducted in private and by marketing to the public because access is restricted by government regulations so very little even no requirement for hedge funds to submit their private information to the public.


The origin and development
The term hedge fund comes from the way the fund management invented by Alfred Winslow Jones in 1949. A.W. Strategy Jones' is a way to sell "short" the stock when he made a purchase of other shares, so it has been done thus hedge the market risk. Many "base investment", "syndicate of investment", "investment partnership" or "dana opportunist" who have different characteristics, different from this modern world which operates telah sekali sudah since long. But Jones is the first time you make a combination of short selling, the use of leverage (leverage), a limited partnership structure in order to avoid the rules, and wore a 20% reward incentives to compensate for his role as "managing partner", and therefore, Jones is recognized as the "father" (inventor) of the hedge fund industry.


To this day still hedging done by doing simultaneous purchase of shares in the long and short stock sales, and even some hedge funds do not trade stocks at all and only enter into transactions in other financial instruments including commodity futures contracts, options, foreign exchange and developing country debt.


Assets managed by hedge fund industry is based on data published by Chicago-based Hedge Fund Research Inc. (Hfr) in the second quarter of 2006 valued in total 1225 trillion USD. This figure rose as much as 20% from the previous year and doubled compared to 2003. on the previous year and nearly Twice Earlier the total three years.


Because hedge funds use "leverage" or using debt to make investments, a position that can do transactions in financial markets is greater than the actual assets being managed.


Hedge funds in the United States has gradually become "active shareholder" in a way mengamblil substantial portion of shares in the company and take control or take any pressure on management improvement.



service
Usually, hedge fund managers will be wearing two different kinds of fees as compensation, ie performance-based fees (performance fees) and management fees as a percentage. Quantities of this management fee generally ranges between 1.5% to 2.0%.


Performance-based fees
Performance-based fees or, more commonly known as performance fee, calculated on a percentage based on the profits / earnings yield obtained as a result of managed funds, so the greater the results obtained, the greater the compensation obtained by hedge funds. In general, hedge fund performance fees on the amount of 20% of the gross revenue received, but the cost range is very wide and varies even on the top hedge fund fees are imposed even greater.


Managers plead that the performance-based compensation helps to align the interests of manager and investor interests are better compared with the compensation system "flat", which still must be paid despite poor performance. But the imposition of performance-based compensation, was criticized by many people including prominent investor Warren Buffett as a gift to the manager an incentive to take risks even greater risk, which is a reverse of large returns in the long term. In an effort to overcome this problem, there is often used in the system "High water mark", where the manager only if the value of obtaining returns from the managed funds have achieved the highest net value than ever achieved in the previous period.


Some hedge funds use a hurdle rates system whereby fees would not be subject to annual performance of managed funds exceeding a reference value such as government bonds or a fixed percentage at a given time period.


Legal structure
Legal structures used in determining the tax liabilities for investors. Many hedge funds have a legal domicile offshore in countries that do not relate well with the manager, investor, or operational activities of investment funds, with the goal of keeping the tax is only levied on investors and not subject to additional taxes on the funds managed.


For investors who have become subject to tax in the U.S., hedge funds are often made in the structure of "limited partnership" because of this type have a more favorable tax treatment in America. Hedge fund managers (who are usually in the form of a company) is a "general partner" or the manager and the investor is a "limited partners" or members. The funds are collected in a partnership or company and "general partner" or a manager will make every investment decision.


For investors outside the United States and American government agencies that are not taxed in the U.S. (such as pension funds) in which they would not have benefited from the kind of "partnership" is so often the structure for this type sHere investors make in the form of offshore funds or unit trusts or in the form of company investment.


At the end of 2004, carrying 55% of hedge funds, which manages nearly two thirds of total funds under management, listed in the Offshore Financial Centre. Offshore location is very famous in the Cayman Islands and British Virgin Islands and Bermuda.


Onshore locations are far more important in terms of location of hedge fund managers. City of New York and Connecticut's Gold Coast area (usually a Stamford, Connecticut and Greenwich, Connecticut), which is the main location of the hedge fund managers with a total of two times the number of hedge funds located in London.


Regulation of offshore
Many offshore financial centers seems to support the establishment of hedge funds by offering some combination of services, implementation of favorable taxation, regulations which are friendly to the world of business with major financial centers including Cayman Islands, Dublin, Luxembourg, British Virgin Islands and Bermuda. It is estimated that the Cayman Islands is a center of about 75% of the hedge fund world, with a market share nearly half of the hedge fund industry with an estimated value of USD 1.225 trillion


Transparency
Some hedge funds, mainly in America, do not use third-party services as a custodian bank that holds their assets, which can bring the impact of conflicts of interest and in more extreme cases can lead to cheating.

Some hedge fund management company

• Amaranth Advisors
• BluMont Capital
• Bridgewater Associates
• Caxton Associates
• Citco Fund Services
• Centaurus Energy
• Citadel Investment Group
• D. E. Shaw & Co..
• Fortress Investment Group
• Goldman Sachs Asset Management
• Long Term Capital Management
• Man Group
• Pirate Capital LLC
• Renaissance Technologies
• SAC Capital Advisors
• Soros Fund Management
• SRR Capital LLC

Terminology
• Commodity pool
• Derivatives market
• Investment fund
• Venture capital


See also
• Mutual Funds
• Security
• Finance
• Financial Markets
• Derivatives