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Definition of 'Hedge Fund'
An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.
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Investopedia explains 'Hedge Fund'
For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of more than $1 million, along with a significant amount of investment knowledge. You can think of hedge funds as mutual funds for the super rich. They are similar to mutual funds in that investments are pooled and professionally managed, but differ in that the fund has far more flexibility in its investment strategies.
It is important to note that hedging is actually the practice of attempting to reduce risk, but the goal of most hedge funds is to maximize return on investment. The name is mostly historical, as the first hedge funds tried to hedge against the downside risk of a bear market by shorting the market (mutual funds generally can't enter into short positions as one of their primary goals). Nowadays, hedge funds use dozens of different strategies, so it isn't accurate to say that hedge funds just "hedge risk". In fact, because hedge fund managers make speculative investments, these funds can carry more risk than the overall market.
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Search results for 'Hedge Fund'
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http://www.investopedia.com/articles/financial-careers/08/become-a-hedge-fund-manager.asp
Starting a hedge fund is the new American dream. Find out how you can pull
it off. ... 7 Hedge Fund Manager Startup Tips. March 27 2012 ...
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http://www.investopedia.com/articles/mutualfund/08/hedge-fund-invest.asp
How To Invest Like A Hedge Fund. ... SEE: A Brief History Of The Hedge Fund.) Cash
Flow Is King Hedge funds can come in all shapes and sizes. ...
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http://www.investopedia.com/articles/trading/11/hedge-fund-startup-services.asp
We review some options, service providers and processes you can follow while starting
up your hedge fund. ... A Guide To Hedge Fund Startup Services. ...
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http://www.investopedia.com/articles/mutualfund/05/HedgeFundHist.asp
A Brief History Of The Hedge Fund. ... The Father of the Hedge Fund Alfred Jones
was born in Melbourne, Australia in 1901 to American parents. ...
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http://www.investopedia.com/articles/mutualfund/05/HedgeFundFailure.asp
Massive Hedge Fund Failures. ... Here we take a closer look at some high-profile hedge
fund meltdowns to help you become a well-informed investor. ...
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http://www.investopedia.com/articles/mutualfunds/09/hedge-fund-due-diligence.asp
Analyzing a hedge fund will help you determine whether it's a good investment -
and a good fit. ... Hedge Fund Due Diligence. April 03 ...
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http://www.investopedia.com/articles/optioninvestor/07/leverage-pitfalls.asp
... Hedge Fund Failures Illuminate Leverage Pitfalls. ... For example, a hedge fund may purchase
very high quality corporate or mortgage-backed bonds using leverage. ...
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http://www.investopedia.com/articles/07/bear-stearns-collapse.asp
Dissecting The Bear Stearns Hedge Fund Collapse. ... A Peek Behind the Hedge To
begin with, the term "hedge fund" can be a bit confusing. ...
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http://www.investopedia.com/articles/financial-theory/11/how-to-legally-form-a-hedge-fund.asp
Research is key before you take any steps in forming a hedge fund, as there are
many options available. ... How To Legally Form A Hedge Fund. ... Refer to 7 Hedge Fund ...
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http://www.investopedia.com/articles/stocks/11/evaluating-hedge-fund-performance.asp
Evaluating Hedge Fund Performance. ... Related Articles. 7 Hedge Fund Manager Startup
Tips. Starting a hedge fund is the new American dream. ...
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