Private funds are typically open-ended, which allows investors to deposit or withdrawal funds in accordance with subscription agreements. An investor’s holdings are calculated as his or her share of the fund’s Net Asset Value. This means that the value of the investor’s holdings raises and lowers in proportion with the overall gains and losses of the fund. Typically fund managers deposit their own capital into their account. Fund managers then receive a base management fee and an additional percentage of capital gains achieved by the fund. Private funds comprise an important part of global financial holdings. As of 2009, private funds represented 1.1% of the total funds and assets held by financial institutions. As of December 2013, the estimated size of the global private fund industry was $2.6 trillion. FNEX offers a variety of private funds including hedge funds, private equity funds and real estate funds.
Hedge funds are private, actively managed investment funds which are not subject to the same regulations as mutual funds or funds regulated by the Investment Advisor Act of 1940. Hedge funds aim to create positive returns despite market conditions. Many funds seek to “hedge the market” or create funds which are market-neutral.
Private equity funds pool capital to invest in privately held firms, typically for growth capital, distressed firm turnarounds or to fund new business lines. For information see below.
Real estate funds can offer diversification that direct real estate investments can not. Real estate funds can also offer investors access to larger opportunities than available to individuals. For detailed information see below.