Most buyers within the inventory market are aware of (and even invested in) mutual funds. A lot of these investments pool collectively cash from all types of individuals, and so they’re closely regulated. Quite the opposite, hedge funds do not incur the identical rules. Due to this, the SEC limits the variety of members they’ll enable.
Particularly, SEC Regulation D (guidelines 504 and 506) discerns that hedge funds should restrict their complete variety of buyers. Due to this, hedge funds normally require a excessive internet price. Oftentimes, the required worth is $1 million or extra.