Just how stocks, bonds, and other investments are well represented by hedge funds, so are currency pairs that trade on the foreign exchange market. Though there are not many forex hedge funds, nor forex hedge fund managers, there exists plenty of opportunity for growth in this industry.
Forex Hedge Funds
Because the foreign-exchange market (forex) is an over-the-counter marketplace, the barriers for entry into this exciting field are very easy to break through. The market is globalized, thus there are no central regulating authorities. As such, forex hedge fund managers can launch their own funds simply by meeting the regulation of the country in which the hedge fund wishes to operate.
Best Fund Countries
The best countries to release a forex hedge fund are those that have a significant flow of capital (to attract investors) as well as limited regulation and oversight. Unfortunately, from the perspective of the hedge fund manager, the United States is unlikely the best place to start. Expensive barriers to entry as well as complicated accounting regulations make it impossibly expensive for upstart forex hedge funds.
Forex Hedge Fund Fees
Hedge funds are some of the most expensive, albeit some of the most profitable, investments for wealthy clients. Ordinary, a hedge fund manager receives as much as 15-20% of the profits each year as well as a 1-2% fee on all accounts at the fund. If the forex hedge fund were to produce returns of 30% on a $100 million portfolio, the hedge fund manager would receive his annual 1-2% cut ($1-2 million) as well as a 20% bonus on the hedge fund’s returns ($6 million at 20%).
[ad#adsensegry]
