Similar to mutual funds, these funds pool resources and invest in a variety of assets. The difference is that these are managed privately, which means that these are not registered or governed by the market regulator, Sebi. Their main aim is to generate high returns in all market conditions by adopting non-traditional investing strategies, which also translates to higher risk.
Main features
Investing criteria: These have minimum investment limits and criteria so that only accredited and high net-worth individuals or institutional investors can participate. This means that the minimum investment amount is very high, typically out of bounds for retail investors.
Risk-return profile: Since the aim is to maximise returns, these use very high-risk investment strategies, using derivatives, leverage and alternative instruments to invest in.
Transparency: These are not transparent like mutual funds and don’t have to declare their NAVs as these are not regulated or registered. How these differ from mutual funds
