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***Please write a brief comment on whether or not the ANSWER given is correct or not, on the right.. 1 answer below » ***Please write a brief comment on whether or not the ANSWER given is correct or not, on the right track or if they could have added anything additional.*** Question: Are hedge funds typically able to obtain higher rates of returns than mutual funds? Answer: The entire concept of hedge funds resides in their lack of constraints. They are not bound by the same regulations as a mutual fund, they are not answerable to the same legislations (although they are constrained by anti-fraud acts). It is this very lack of regulation that can make the hedge fund so lucrative. However, it also has the View complete question » ***Please write a brief comment on whether or not the ANSWER given is correct or not, on the right track or if they could have added anything additional.*** Question: Are hedge funds typically able to obtain higher rates of returns than mutual funds? Answer: The entire concept of hedge funds resides in their lack of constraints. They are not bound by the same regulations as a mutual fund, they are not answerable to the same legislations (although they are constrained by anti-fraud acts). It is this very lack of regulation that can make the hedge fund so lucrative. However, it also has the power to plummet as sharply as it rises creating enormous losses such as the near economic collapse as orchestrated by Long-Term Capital Management when they used derivatives to “hedge bets” on the turnaround of Russia’s 1998 economic failure. The U.S. Federal government funded a 3.6 million dollar bail-out to prevent further devastation in U.S. markets. That being said, typically yes, hedge funds to obtain higher rates of return, but they are considerably riskier investments. View less » Sep 10 2015 01:31 PM
