1. Hedge Funds: Introduction
  2. Hedge Funds: Structures
  3. Hedge Funds: Strategies
  4. Hedge Funds: Characteristics
  5. Hedge Funds: Performance Measurement
  6. Hedge Funds: Risks
  7. Hedge Funds: Why Choose Hedge Funds?
  8. Hedge Funds: The Due Diligence Process
  9. Hedge Funds: Funds Of Funds
  10. Hedge Funds: Conclusion

By Dan Barufaldi

Although hedge funds usually get negative media focus, many hedge funds are actually very good investments and can be an integral part of a well-diversified portfolio. But what exactly is a hedge fund, and what are some of the factors one should know about hedge funds before making an investment? In the following tutorial, we'll introduce basic hedge fund characteristics and strategies as well as some simple guidelines for evaluating hedge funds. By no means should this tutorial form the basis of any due diligence process for investing in hedge funds, but it can serve as a guide leading to more fruitful conversations with an investment manager that has experience with these vehicles.

Hedge funds can be very risky investments and many investors have been burned by huge hedge fund blow-ups. On many occasions, investors follow the herd mentality of chasing returns, plunging more and more money into a high-performing fund, without regard for how the performance was obtained and – more important – whether the performance can be repeated in the future.

In this tutorial, we won't expect to create an expert hedge fund analyst out of you, but if you are new to hedge funds or you or your advisor are considering investing in hedge funds, this tutorial will give you some basic knowledge of how they are structured, their strategies and characteristics, as well as how to use them in your portfolio. (For more background, read Introduction To Hedge Funds – Part One and Introduction to Hedge Funds – Part Two.)


Hedge Funds: Structures
Related Articles
  1. Investing

    What Are Hedge Funds?

    Hedge funds may be similar to mutual funds in some ways, but they differ in other ways like fee structure. Is a hedge fund for you?
  2. Investing

    Taking A Look Behind Hedge Funds

    Hedge funds can draw returns well above the market average even in a weak economy. Learn about the risks.
  3. Investing

    Evaluating Hedge Fund Performance

    Most investors are aware of hedge funds, but many don't know the dirty details of this unique investment type.
  4. Investing

    Hedge Funds Go Retail

    Find out how average investors are breaking into what was once reserved for the ultra rich.
  5. Investing

    How To Start a Hedge Fund In the United States

    A general overview of how to start a hedge fund firm in the United States, including complying with state and federal regulations.
  6. Personal Finance

    10 Steps to a Career In Hedge Funds

    Experience and hard work go a long way toward securing a position in this challenging field.
  7. Investing

    What Are Some Reasons to Invest in Hedge Funds Now?

    Financial news has been dominated in recent months by reports of hedge fund struggles. Are there any reasons why investors might consider hedge funds now?
  8. Small Business

    7 Hedge Fund Manager Startup Tips

    Starting a hedge fund is the new American dream. Find out how you can pull it off.
  9. Trading

    Hedging Basics: What Is a Hedge?

    This strategy is widely misunderstood, but it's not as complicated as you may think.
  10. Investing

    Investors Are Turning to ETFs Over Hedge Funds

    Exchange-traded funds have grown to surpass hedge funds in total assets, signalling a major shift in investor strategy.
Frequently Asked Questions
  1. Who determines interest rates?

    In countries using a centralized banking model, interest rates are determined by the central bank. In the first step of interest ...
  2. What's the Best Way to Contact Warren Buffett?

    Learn how to contact Warren Buffett and what kinds of contact is most likely to receive a response from him or from his company, ...
  3. What is the Financial Services Sector?

    A diverse group of companies, beyond banks and credit unions, comprises the financial services sector.
  4. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ...
Trading Center