Types of Hedge Fund Investors

CHAPTER
3
Types of Hedge Fund Investors
T
he individuals and institutions that invest in hedge funds are surprisingly
different in terms of risk tolerance, investment horizon, investment ob-
jectives, and investment restrictions. (See Figure 3.1.) Many of the differ-
ences between investors involve the way they are taxed (if they are taxed at
all). This chapter includes a discussion of the tax treatment of these in-
vestor types. (Hedge funds usually pay little or no tax but must flow
through the taxable amounts to investors in many countries, including the
United States. For a description of how a partnership calculates the tax
consequences of the hedge fund investments, see Chapter 10.)
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FIGURE 3.1
Hedge Fund Investors, December 31, 1999
Source: Tass Research.
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