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Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
A hedge fund is a private investment fund that uses advanced strategies — short selling, leverage, derivatives — to attempt to generate positive returns regardless of market direction. In Canada, they are restricted to accredited investors (generally $1M in financial assets or $200,000 in annual income).
Typical hedge fund fees follow the "2 and 20" structure: 2% annual management fee + 20% of profits. On a gross return of 10%, you keep only 6.4% after fees. By comparison, an index ETF like XEQT.TO has an MER of 0.20% — 10× less than the management fee alone of a hedge fund.
Hedge funds are not accessible to beginner investors, and that is a good thing. Research shows that the majority of hedge funds underperform a simple index ETF like VFV.TO after fees. For an ordinary investor, a portfolio of low-cost ETFs (XEQT.TO, VGRO.TO) offers superior diversification at 50 to 100 times lower fees.