Incubated Fund

A fund that is offered privately when it is first created. Investors of this type of fund are usually employees associated with the fund and their family members. Incubation allows fund managers to keep a fund's size small while testing different investment styles before the fund is available to the public and subject to rules and regulations.

These types of funds are never officially called "incubated," but are instead called "limited distribution" funds.

There are two paths that can be taken by an incubated fund. If the fund is able to achieve excessive returns it is "born" and made available to the public. However, if returns are not adequate, the fund is liquidated and "buried."

The use of incubated funds has come under criticism in recent years. This is because incubated funds are not managed under normal conditions and, therefore, the returns achieved can be greater than normal. When the fund is advertised to the public, it may not be able to replicate the incubated returns it advertises. To avoid problems, investors must be able to identify whether a fund was first an incubated fund. However, this is easier said than done, as fund managers usually attempt to hide a fund's incubator origins.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Incubation — A trial process in which a fund company operates a number of funds privately with its own capital or employee capital, and only opens the top performing funds to the public. The higher performing funds that survive the incubation period are used… …   Investment dictionary

  • Jerusalem Biblical Zoo — Zoo logo A Black Handed Spider Monkey swings on a rope over the artificial lake at the zoo Date opened 1940 …   Wikipedia

  • Life Sciences — ▪ 2009 Introduction Zoology       In 2008 several zoological studies provided new insights into how species life history traits (such as the timing of reproduction or the length of life of adult individuals) are derived in part as responses to… …   Universalium

  • Fidelity Investments — FMR LLC Type Private Industry Financial services Founded 1946 Founder(s) Edward Joh …   Wikipedia

  • Namibia — Republic of Namibia …   Wikipedia

  • Peregrine Falcon — Adult Peregrine Falcon (Falco peregrinus) of subspecies pealei or tundrius in Alaska Conservation status …   Wikipedia

  • Falconry — For the unblack metal album, see Falconry (album). Flying a Saker Falcon …   Wikipedia

  • Dennis Puleston — (30 December 1905 8 June 2001) was a British born American environmentalist, adventurer and designer. He is perhaps best known for playing a key part in securing a nationwide ban in the United States on the use of the pesticide DDT, a decision… …   Wikipedia

  • Belize — Belize …   Wikipedia

  • Rave — For other uses, see Rave (disambiguation). For the genre rave music , see rave music and breakbeat hardcore. A large rave event, held in a warehouse sized venue, with elaborate lighting and a large sound system Rave, rave dance, and rave party… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.