Hedge Fund Investments and the Prudent Investor Rule
Posted: 7 Nov 2003
This article is concerned with the key legal issue facing institutional investors that have made or are considering hedge fund investments, namely the legal duty to invest the funds entrusted to them prudently. These investors do not, in general, invest for their own account but, instead, undertake investments for the benefit of others.
The article is divided into two parts. The first part explains the nature of hedge funds and the chief hedge fund investment strategies. The second part examines the "prudent investor rule" and provides a practical checklist for institutional investors.
Keywords: Hedge Funds, Alternative Investments, Prudent Investor Rule Governance, Pension Funds
JEL Classification: G23, K22
Suggested Citation: Suggested Citation