Variable Mutual funds Variable Banks Conservative Insurance companies Generally conservative Endowment funds Depends on proximity of payouts Pension funds Life cycle Individual and personal trusts Risk Tolerance Type of Investor
Hedge funds pool investors’ fund. They are not registered as mutual funds, and under less stringent regulations than mutual funds.
Typically open to wealthy or institutional investors.
Heavy use of derivatives, short sales and leverage.
Typically attempt to exploit temporary mispring. E.g., abnormally high mortgage-backed securities (MBS) relative to T-bonds. Then buy MBS and short-sell T-bonds. The fund hedges interest rate risk, but bets on relative pricing of the two assets.