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Can I invest in a Hedge Fund?
Home » Investing » Hedge Funds » Can I invest in a Hedge Fund?As discussed above, the investor pool for each hedge fund is usually quite small. While that is due in part to the advertising restrictions placed upon hedge funds, the principal reason lies in the strict requirements for potential hedge fund investors. Nonetheless, you can invest in a hedge fund if you possess certain qualifications. The SEC limits hedge fund investments to investors who are both accredited investors and qualified purchasers. In order to qualify as an accredited investor, you must have an income of at least $200,000.00 per year or net assets of $1,000,000.00 or more. Qualified purchasers must possess a minimum of $5,000,000.00 in qualified investments.
Even if a potential investor meets the accredited investor and qualified purchaser requirements, they must also demonstrate a willingness to make a large initial investment; in many cases the minimum initial investment is $1,000,000.00. For those investors who do not qualify as accredited investors or qualified purchasers, or who are unable or unwilling to pay such a substantial initial investment, fund of hedge funds offer an opportunity to invest in a hedge fund. Fund of hedge funds are hedge funds that invest only in other hedge funds, rather than in standard securities or commodities. Such funds may accept investors who do not qualify for standard hedge fund investments, and the initial investment is much smaller.
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