What is a Hedge Fund?
A hedge fund is an actively managed investment fund that uses a wide range of financial instruments and strategies to generate returns in various market conditions. These strategies often include both long (buying assets expected to increase in value) and short (selling borrowed assets expected to decline in value) positions. Many hedge funds also use derivatives and other risk-management techniques to hedge certain exposures and manage risk.
Hedge funds are often viewed as an alternative to mutual funds, traditional investment firms, and banks. They typically attract experienced or high-net-worth investors seeking higher returns and greater flexibility in investment strategy.
Unlike many traditional mutual funds, which generally aim to generate returns primarily in rising (bull) markets through long-only strategies, hedge funds can take both long and short positions. This flexibility allows them to pursue returns in both rising and falling (bear) markets, although it also involves higher risk and complexity.
The legal structure of a hedge fund is typically a limited partnership, composed of a group of investors who participate as limited partners. The fund is managed by a general partner, which is responsible for implementing the investment strategy and overseeing the fund’s operations.
In the case of HETMED Fund, the general partner is Rimon Hedge Funds Ltd., which manages the portfolio and executes the investment strategy on behalf of all investors.
In most hedge funds, investors pay the general partner both:
- A management fee (commonly around 2% of assets under management), and
- A performance (success) fee (commonly around 20% of the profits generated).
However, in HETMED Fund, the general partner is compensated solely through performance-based fees, calculated on actual net profits generated for all partners (the investors). This structure aligns the interests of the fund manager with those of the investors, as compensation is directly tied to performance rather than asset size.
In order to protect all partners, the Fund employs two important gatekeepers:
A trustee attorney is appointed to safeguard the interests of the fund’s investors. The trustee serves as the sole authorized signatory on the fund’s investors’ account.
The role of the trustee is to ensure that investors’ funds are used exclusively for legitimate investment purposes in accordance with the fund’s governing documents. The trustee does not have discretion to use, transfer, or redirect the funds for any purpose other than those expressly permitted under the fund’s investment mandate.
This structure provides an additional layer of oversight and protection, reinforcing proper governance and safeguarding investors’ capital.
A Certified Public Accountant (CPA) is responsible for the fund’s financial oversight and reporting. The CPA prepares and verifies the calculation of profits and losses, issues periodic financial reports to investors, and oversees the distribution of profits to the fund’s partners.
In addition, the CPA is certified by the tax authorities as a tax trustee, enabling the firm to perform tax calculations on behalf of the fund’s partners. This ensures accurate tax reporting and helps prevent overpayment or miscalculation of tax liabilities related to the fund’s activities.
Since commencing operations, HETMED and MANGO Hedge Funds have delivered consistent double-digit annual returns, outperforming relevant market benchmarks, while maintaining relatively low volatility and disciplined risk management.
The fund operates within a clearly defined risk framework and maintains liquidity consistently with its investment strategy, providing investors with both performance potential and prudent capital management.
We invite you to join our family of investors here in HETMED Hedge from Rimon Hedge Funds Ltd. and enjoy surprising returns and with zero management fees.