CFA Practice Question

There are 139 practice questions for this study session.

CFA Practice Question

Comment on the following statement:

Hedge fund strategies are usually too complex for a typical mutual fund investor to understand.
Correct Answer: It is true.

Mutual funds and other institutional investors can gather a lot of funds from investors by promoting simple strategies. Mass selling of hedge fund strategies is much harder because these strategies are too complex for them to understand.

User Contributed Comments 2

User Comment
johntan1979 Also because of the lack of disclosure.
ankurwa10 Johnathan1979 hit the nail on its head. Though there is this argument that since the minimum investment is way lower for MFs than for HFs, it is presumed that investor is generally less sophisticated. So, it is not entirely due to lack of disclosure.
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