Good Finance fund – do you know what it is?

A Good Finance fund is a collective term for many different types of special funds. Common to them is that they are freer rules for their investments than mutual funds, for example. They can use loans, short sales and investments in various types of derivatives to raise interest rates.

The fact that the business idea is based on the fund

The fact that the business idea is based on the fund

The name suggests that funds are based on hedging, but despite the fact that the business idea is based on the fund will always give a positive return regardless of what happens on the stock exchange, so in practice it is very possible that the fund is at a loss.

A common form of compensation is that the management fee

A common form of compensation is that the management fee

Common to Good Finance funds is that they aim for absolute returns, ie returns that are independent of how the stock market is performing. They usually have a performance fee.

A common form of compensation is that the management fee is 20% of the return that exceeds the state’s lending rate per year. Some Good Finance funds use so-called watermarks, which means that the fund, after falling, does not charge a performance fee until the value returns above its previous value.

Good Finance funds is that these are high risk

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A traditional and 1990s common view of Good Finance funds is that these are high risk and should be avoided by ordinary people. 

This was a result of the LTCM (Long-Term Capital Management) Good Finance fund lost $ 4.6 billion and went bankrupt in 1998, despite the fact that Nobel laureates are part of the fund’s board. Today, 2006 is a different approach – it is both Good Finance funds that take high risk and those with a significantly lower risk than equity funds.

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