Hedge funds collaborating with private equity firms usually expect to receive what type of return on their investment?

When hedge funds collaborate with private equity firms, they typically seek to achieve the same potential returns as private equity investors. This collaborative approach often involves participating in the same investment opportunities and sharing in the risks associated with those investments, leading to returns that align with the overall performance of the private equity fund.

Both hedge funds and private equity firms operate with the goal of generating significant returns on their investments, driven by strategic involvement in various assets and companies. Hedge funds may also employ their expertise in trading or hedging strategies to enhance returns, aiming for growth that matches or exceeds the traditional private equity return benchmarks over time.

In contrast, fixed interest rates and guaranteed profit margins do not reflect the nature of equity investments where returns are tied to the success of underlying businesses. A minimal return irrespective of performance does not align with the high-risk, high-reward mentality that characterizes notable hedge fund and private equity strategies. Thus, the expectation of achieving similar potential returns reinforces the collaborative investment philosophy that hedge funds have when working alongside private equity firms.