Hedge Funds – A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction and risk management techniques to improve performance, such as short selling, leverage, and derivatives. Financial regulators generally restrict hedge fund marketing except to institutional investors, high net worth individuals and others who are considered sufficiently sophisticated. Generally hedge funds are open-ended and they receive performance fees on unrealized gains.
Private Equity Funds – Private equity is a type of equity and one of the asset classes consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange. A private-equity investment will generally be made by a private-equity firm, a venture capital firm or an angel investor. Each of these categories of investors has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or ownership. Private Equity funds are generally closed-ended and only receive performance fees on realized gains.
Real Estate Funds –
Venture Capital Funds – Venture capital funds are pooled investment funds that manage the money of investors who seek private equity stakes in startups and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as very high-risk/high-return opportunities.In the past, venture capital (VC) investments were only accessible to professional venture capitalists, but now accredited investors have a greater ability to take part in venture capital investments. Still, VC funds remain largely out of reach to ordinary investors.
Other Funds –
SAF Funds – Securitized products are pools of financial assets that are brought together to create a new security, which is then divided and sold to investors. Since the value and cash flows of the new asset are based on its underlying securities, these investments can be hard to analyze, but they have their benefits. Mortgages (residential and commercial), credit card receivables, auto loans, student loans, etc. can each be pooled together to create securitizations.
Liquidity Funds – Private liquidity funds entered the SEC vocabulary as the result of the February 2010 money market fund reform, which required private fund investment advisors to file Form PF by December 2012. The SEC defines liquidity funds as “any private fund that seeks to generate income by investing in a portfolio of short term obligations in order to maintain a stable net asset value per unit or minimize principal volatility for investors.”