Private Investment Fund


DEFINITION of 'Private Investment Fund'

A type of financial investment company which meets either of these criteria:

a) it has less than 100 investors, or
b) its member investors have substantial funds invested elsewhere.

These types of funds are generally exempt from federal securities regulations and laws and are included under the label of "hedge funds".

BREAKING DOWN 'Private Investment Fund'

Due to the nature of these investment companies, their member investors generally have significant personal wealth and are considered sophisticated enough to not require the same level of regulatory protection accorded to small investors by law. This designation provides added flexibility for private investment funds.

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  1. What's the difference between a mutual fund and a hedge fund?

    These two types of investment products have their similarities and differences. First, the similarities: Both mutual funds ... Read Full Answer >>
  2. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  3. Are hedge funds regulated by FINRA?

    Alternative investment vehicles such as hedge funds offer investors a wider range of possibilities due to certain exceptions ... Read Full Answer >>
  4. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  5. Can hedge fund returns be replicated?

    You can replicate hedge fund returns to a degree but not perfectly. Most replication strategies underperform hedge funds ... Read Full Answer >>
  6. Can foreign investors invest in US hedge funds?

    U.S. hedge funds are open to accredited investors. When they distribute profits to investors, those proceeds are taxed at ... Read Full Answer >>

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