Hedge funds initially, from the moment of their emergence, became a mifotvorchestvo subject. There was it thanks to the sonorous and unusual name which influence also amplifies at the expense of attractiveness of those actions which are meant by this term. As the hedge in practice of financial management is understood as a complex of the actions directed on providing a covering of risks of financial character, it, as a rule, suggests that the hedge fund and is urged to be engaged in it. Such opinion created preconditions for myth emergence about high profitability of operations of a hedge that proved to be true reports of hedge funds on the activity. It is hard to say, what exactly did bigger harm to the idea of application of a hedge for a covering of financial risks: ignorance of bases of quite thin and difficult management science by risks or use by hedge funds of designation applied by them. But the fact remains, the majority of people are sure that hedge funds are created and operate on the market only for the purpose of implementation of orders of the clients in the field of a covering of risks of financial character: price, percentage, foreign exchange and so forth. What is the hedge fund? In realities, idea of hedge funds as about the organizations which are engaged only in risk management, doesn't represent the facts at all. It is quite probable that for the separate companies it can be truth, but generally the name doesn't define a circle of operations which the hedge fund makes in the market. Performance of actions in the market, falling under concept of hedging, is only an additional element of management of assets, and is obligatory for all financial institutions in modern conditions of the market. In the American understanding the hedge fund represents, as a rule, the private investment partnership investing mainly in publicly traded papers or derivative financial instruments. However some of funds don't limit the activity by this direction, and work as well at other markets, for example, the commodity. In principle, the market segment round which interests of these financial institutions are concentrated, entirely is defined by the purposes pursued by them. In hedge fund there are two types of partners: General Partner and Narrow Partner. The general Partner is a founder of hedge fund. He conducts all everyday activity of operating fund. Narrow Partners participate the capital, but don't accept participation in trade and everyday activity of fund. A typical form of the organization of the General Partner - LLC (Limited Liability Company - the company with limited liability), thus it is beyond all bounds responsible in partnership. The narrow Partner of investment partnership is responsible only within the investments in partnership.
For all types of service which are rendered by the General Partner, he receives the stimulating payment defined by the partner agreement. Usually it makes about 20 % of net profit of partnership. Besides, it is appointed also the administrative payment which size, as a rule, makes 2-3 % of size of net assets. The result of activity of hedge fund is distributed between all partners in proportion to their individual share. All relationship of Partners is in details established in the partner agreement which is the most important part of any hedge fund. As the hedge fund is private investment partnership, the American Commission on securities and the exchanges (to Securities and Exchange Commission, SEC) limits number of investors which can enter into it, to 99. Thus, at least 65 from them should have the status of "accredited". The status of the "accredited" investor is determined by criterion of net value of a share contribution which has a certain level. Its level can be very high and make size from 1 mln. dollars. Taking into account that similar investments belong to the category risky, to the "accredited" investor it can be demanded also to prove the right to dispose of such sum without damage to the family budget. Differently, to give necessary assurances that this one million isn't the last. Offshore hedge funds represent, as a rule, the mutual fund (mutual fund) being the resident in preferential tax zones - such, as Bermuda. The same technologies of investment, as to hedge funds therefore in this foreshortening they are related are also available to them. But, nevertheless, between them there are also some distinctions which not always are easily looked through. Generally business concerns structure of distribution of the income of operations, entrance and exit principles from partnership, and also information transparency of results of functioning of business.