There are over a hundred thousand mutual funds worldwide, with a value of assets managed in the trillions of U.S. dollars. These funds are accessible to normal investors. Hedge funds, on the other hand, target high net worth individuals or institutional investors. These funds take on a variety of strategies, with hedge funds having a more aggressive stance and therefore more volatility in returns. Pension funds target a more modest rate of return in exchange for less risk. The average pensioner relies heavily on that investment for daily expenses, while a hedge fund investor can usually absorb a larger loss more easily. Finally, exchange-traded funds (ETFs) offer passively-managed portfolios, groups of assets that investors can put money in without the hands-on oversight that is common in mutual funds.
For many investors, these options are too generic, too mainstream, or do not take into account certain ideological considerations. An increasingly large share of the population demands religious or socially responsible investments, the latter of which focus on topics such as environmentalism or gender equality. Private equity fundraising gives wealthy investors access to private companies and startups with greater growth potential, and fintech firms are opening this market open to more people through crowdfunding platforms. Fintech has also created wholly new methods of investing, such as initial coin offerings. However, many of these investments are high risk, meaning that the possibility of significant profit carries a greater risk of losing one’s entire investment. For many investors, traditional investment funds remain a quite safe and easily accessible means of investment.