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Question of the Week - Alternative Investments

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited January 2016 in Level 1 Questions
Which of the following is least typically a difference between hedge funds and mutual funds?
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Question of the Week - Alternative Investments 27 votes

Hedge funds are less liquid.
11%
scarebaerjtk08001mukta 3 votes
Hedge funds charge management fees.
51%
AdaptPreprsparksgoogs1484SkoganMckonkiepaulopita123sinivymdlynch3alfredjcabrerasramanspabulumschrupekBlueJay3535hakzi 14 votes
Hedge funds have more strategies available.
37%
nirmal1995riteshbadaisemre06Pahtsandatasci_leocfahelperwinter98purehazeBaz_DOLUSEGUN 10 votes

Comments

  • scarebaerscarebaer Denver - COPosts: 15 Associate
    edited January 2016
    Hedge funds are less liquid.

    hedge funds have more strategies avail - there are a bijillion mutual funds with strategies that range from money market, debt, options, equities etc etc. most hedge funds are built on one strategy at any given point in time. 

    Hedge funds charge management fees. yes they do, most charge a 2 in 20. 2% of money and 20% of profits. But so do mutual funds. 

    Hedge funds are less liquid. this is absolutely true. Most MF are traded on the open market, or can be liquidated in a day. Hedge funds typically state you can't take your money out for a period of time (industry std 1 year) 

    Now having said all of that, I actually don't know what the answer is. I refer to least typically a difference meaning not a difference. Since A is true and C is false, I guess B is the answer given that they both DO charge management fees. Even though I did put A without carefully reading the question
  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    Hedge funds charge management fees.

    All of the above are true about hedge funds. However, like hedge funds, mutual funds also charge management fees. The fee amount and structure are very different (fees are typically higher on hedge funds), but they are present in both.

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