Any investment fund geared towards generating maximum possible returns can be considered a "high-income fund". This typically includes hedge funds, mutual funds, exchange-traded funds (ETFs), and other types of funds, as long as the investment strategy they employ is aimed at maximizing returns.
The term "high-income fund" isn't strictly defined. Any fund that aims to maximize returns can be said to be a "high-income fund", regardless of how it seeks to achieve this goal or how successful it ultimately is.
There are various ways in which funds can try to maximize their yield, generating a significant income for investors. In some cases, such as with hedge funds, this involves aggressive investing with little hedging, leading to increased risk. In contrast, other funds may focus on high-yield bonds, which are relatively safe but don't exactly generate the maximum possible returns.
Before you start investing, you should look at the available fund types to determine which model can provide you with the greatest returns – or the greatest returns at the lowest risk, depending on your investment objectives.
Mutual funds and ETFs are relatively safe investments, even when they aim for maximum capital gains. That's because they are limited to investing in SEC-registered securities and assets, providing an additional layer of safety for investors. Many such funds invest in high-yield bonds as a relatively safe and reliable investment options. Typically, government-issued bonds offer less risk and less potential gain, while company bonds feature increased risk and an increase in possible gains.
Other funds tend to focus on dividend-paying stocks. They buy shares in companies that are likely to be able to pay significant dividends in the near future. The effectiveness of this approach depends entirely on the company's performance increasing over time. If the company can increase its value, it's a great way of supplementing your current income with relatively large regular dividends.
Among all fund types, hedge funds have the greatest potential to deliver excellent returns.
But for those truly aiming for maximum returns, hedge funds are the best option by far. Since most SEC regulations don't apply to hedge funds, they can invest in a variety of assets not available for mutual funds or ETFs. From private equity to financial derivatives, many of these assets have the potential to provide incredible total returns. However, the risk involved is also greater than other fund types. Hedge funds use portfolio diversification and hedging strategies to mitigate this risk. However, risk mitigation usually comes with a price. For example, the typical long/short model can counteract losses in one position with the gains of the other, but this also means that total returns will be lower than they could be without hedging strategies in place. Ultimately, you'll need to decide where you feel most comfortable on the sliding scale of profit maximization and risk management.
What Expense Ratio Has to Say About Your Chosen Fund
Most types of funds use at least some of the returns they receive to cover expenses such as the fund manager's salary or the back-office staff. Such expenses can diminish the yield of your chosen fund, so you should check how much of the money your chosen fund makes is put back into running the fund. For hedge funds, this is usually a management fee (typically 2 % of all assets under management) and a performance feed (20 % of profits from any investment whose profits go beyond the hurdle rate).
Fees and expenses rarely make a fund significantly less lucrative, but the expense ratio can give you an impression of how much of the fund's profits will be required to keep it going – effectively diminishing your returns to a small extent. If you're looking to maximize your income, a low expense ratio shouldn't be the only criteria for your investment decision – but it could tip the scales in a close race.
As an accredited investor, you can also choose to invest in CARL's quantitative hedge fund strategies. If you're looking to get high yields at a manageable level of risk, CARL's quants are the perfect choice for you. That's because:
- Quantitative investment strategies are more efficient than funds controlled by a hedge fund manager, allowing them to maximize returns from minute market opportunities.
- Quants use sophisticated computer algorithms to outperform most other fund types, making them ideal for high-yield investment strategies.
- Quants use built-in risk management tools to limit the risk investors are exposed to – this works even when the overall investment strategy is highly aggressive to generate maximum returns.
While traditional hedge funds employ hedge fund managers to determine which assets the fund will invest in, quants use sophisticated computer algorithms, machine learning principles, and macro-scale market modeling. Judging by past performance, quants have frequently outperformed traditional hedge funds. What's more, they tend to do very well in highly volatile market environments. This enables them to consistently make very lucrative investments in assets that a human manager may have overvalued or perhaps undervalued.
Which Assets Do CARL's Quants Invest In?
CARL gives you access to a variety of highly sophisticated quants you can invest in. Our quants use varying strategies, from trading on the stock market to dealing in derivatives. The CARL app also allows you to look at each fund's past performance to determine which of them you would consider high yield funds.
This gives you total freedom over your investment. Do you prefer putting your money into a quant that invests aggressively without using hedging strategies? You'll find what you're looking for at CARL. Do you prefer having a reliable income at a low-risk level? Choose one of our heavily hedged investment funds to limit your overall market exposure. The decision is yours.
Quantitative hedge funds are the best way to establish high investment income. Previously, access to such high-yield funds was only available to high net-worth individuals and the uber-rich. CARL aims to change this by providing access to high-yield quants to accredited investors across the country. As long as you qualify as an accredited investor, you can use the power of quants to your advantage, thanks to our convenient mobile app.
With 15%+ targeted returns, CARL's quants can certainly be considered "high-yield". And while other hedge funds typically have long lock-up periods, meaning you won't be able to withdraw your money in a pinch, CARL allows you to withdraw and invest on a monthly basis, making our funds not just high-yield but highly liquid investments to boot. Contact CARL to set up your account today and experience the power of quants at your fingertips.