FAQ's
What are Hedge Funds?
What defines a Hedge Fund?
Hedge Funds are private investment vehicles that employ complex strategies (leverage, derivatives,
short selling) to generate absolute returns regardless of market direction.
What is the main difference between Hedge Funds and traditional funds?
While traditional funds seek to track indexes (e.g. S&P 500), Hedge Funds focus on returns
absolutes, using techniques such as arbitrage and macro investing, even in falling markets.
Who can invest in Hedge Funds?
Mostly investors who want to use strategies for their wealth
Why are they considered “uncorrelated”?
Strategies such as short selling and market neutrality allow you to profit from crises, reducing dependence on cycles
traditional stocks or bonds.
What are the main risks?
Excessive leverage, lack of liquidity (quarterly/annual redemptions) and exposure to unregulated instruments (e.g.:
OTC derivatives).
What is the role of Forex in Hedge Funds?
Currencies like EUR/USD are used for arbitrage, carry trade (exploiting interest rate differences) and hedging
exchange rates in global portfolios.
What is a "fund of hedge funds"?
Fund that diversifies across multiple Hedge Funds, reducing specific risk but adding layers of fees.
Are Hedge Funds regulated?
Yes, but with less transparency than traditional funds. In the EU, they follow directives such as AIFMD and MiFID II.
Account Types
What types of accounts are there in Hedge Funds?
Accounts for qualified investors, institutional investors (e.g. pension funds) and family offices, with minimum requirements from €500k to €5 million.
What are "Prime" accounts?
They offer superior leverage (up to 1:100 on Forex), access to interbank liquidity and exclusive instruments (e.g.: currency swaps).
Are there accounts for non-EU residents?
Yes, but subject to local regulations (e.g. FATCA in the US) and additional exchange rates.
What is the difference between onshore and offshore accounts?
Onshore (e.g. Luxembourg) follow EU rules; offshore (Cayman Islands) offer tax advantages, but less investor protection.
How do redemption deadlines work?
Lock-ups (12-24 months without redemptions) are common, followed by quarterly periods with 30-90 days notice.
Are there multi-currency accounts?
Yes, mainly in USD, EUR and GBP, with automatic conversion or integrated currency hedging options.
What is a "managed" account?
The manager actively operates the allocation, in contrast to execution-only accounts, where the investor decides the
strategies.
What documentation is required?
KYC (identification), proof of qualification (e.g. financial certification), and AML (anti-money laundering) compliance.
Do institutional accounts have benefits?
Reduced fees (e.g. 1.5% + 15% performance fee) and access to exclusive research reports.
Deposits and Other Questions
What is the minimum initial deposit?
€250 to €1 million, depending on the fund and jurisdiction (e.g. EU requires €500k for professional investors).
How are deposits made?
Via SWIFT transfer (for prime accounts in USD/EUR) or secure platforms like PrimeXM, with
confirmation in 1-3 business days.
Are there any fees on deposits?
Some funds charge 0.1% to 0.5% to cover processing or currency conversion costs.
Are deposits guaranteed?
No. Unlike banks, Hedge Funds do not have deposit insurance (i.e. not covered by the FDIC or other schemes).
similar to the EU).
Is it possible to withdraw partially?
Generally not. Redemptions are total and subject to gates (monthly withdrawal limits) in liquidity crises.
What is the time frame for processing a withdrawal?
Up to 90 days after the lock-up period, especially in funds with illiquid assets (e.g. commercial real estate in
Frankfurt).
Are there taxes on deposits?
Not directly, but gains are taxable according to the investor's tax residence (e.g. 28% in Germany for capital income).
Crypto Deposits Through
Crypto deposits are accepted through payment providers. Restrictions may apply by country or specific regulations.