November 03, 2016   by

In today’s investment ventures, ensured the low return is adequate, and that clarifies why most financial specialists will decide on speculation at the equity market sector to some other alternative. In the larger world of fund administration, sufficiently huge is adequate.

Most financial specialists will decide on administered funds that are broadened to the degree that business sector volatility as regularly as they strike, don’t spell fate on the customer’s speculation.

Hedge Funds

  1. A hedge fund is an investment avenue available to institutions or groups who have a large asset base.
  2. These include  examples like mutual funds. Hedge funds are pools of underlying securities.
  3. Like mutual funds, Hedge fund investors can invest in a variety of securities.

What to consider before investing in Hedge Fundshedge funds

  1. The Chama must be ready to invest.
  2. The Chama must be having a minimum level of income or assets, to invest in hedge funds.
  3. Know in-depth information about the Hedge Funds; It’s informative to involve all the members of the Chama in this.
  4. Make sure each member understands the level of risk involved in the investment strategies that the group is about to engage in and that the risks are suitable for the groups investing goals and risk tolerance.

As it is said, with any investment, the greater the potential returns, the higher the risks you must assume.

Valuation of Assets

Hedge funds hold investments that are difficult to sell and value.

The Chama needs to  understand the valuation process and know the extent to which independent sources value a fund’s holdings.

Fees Charged

  1. Prices impact investment returns.The most known Hedge funds  charge an asset management fee ranging from  1-2% of the property.
  2. Besides a  “performance fee” of 20% of the hedge fund’s profit is also charged.
  3. A performance fee could motivate a hedge fund manager to take greater risks in the hope of generating a larger return.


Hedge funds typically limit opportunities to redeem, or cash in shares, and often impose a “lock-up” period of one year or more, during which the group cannot cash in shares.

 Hedge Fund Managers

The Hedge Fund manager chosen to manage the Chama’s money needs to be qualified, and the group needs to be informed if they have a disciplinary history within the securities industry.

Hedge fund investments are not commonly known in the Kenyan market. the most known are trusts and shares . thus its important for any Chama to do thorough research before investing in Hedge Funds .

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This post was written by Anne Oyoo

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