Hedge Funds Tutorial
  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

Hedge Funds: Introduction

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

  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
RELATED TERMS
  1. Hedge Fund

    An aggressively managed portfolio of investments that uses leveraged, ...
  2. Hedge Fund Manager

    The individual who oversees and makes decisions about the investments ...
  3. Blow Up

    A slang term used to describe the complete and abject failure ...
  4. Hedge Accounting

    A method of accounting where entries for the ownership of a security ...
  5. Hedge Ratio

    1. A ratio comparing the value of a position protected via a ...
  6. Hedge

    Making an investment to reduce the risk of adverse price movements ...
RELATED FAQS
  1. What happens if you don't hedge your investments?

    Learn the purpose, advantages and disadvantages of hedging, and find out how to utilize hedging to enhance an overall investment ... Read Answer >>
  2. Can you invest in hedge funds?

    Read about what it takes to invest in a hedge fund, and learn how some investors find ways to indirectly capture a hedge ... Read Answer >>
  3. What is the purpose of a hedge fund?

    Find out what a hedge fund is, how it is set up and why it is different than other forms of investment partnerships like ... Read Answer >>
  4. How do hedge funds use short selling?

    Learn how hedge funds use short selling to profit from stocks that are falling in price. Explore different analytical techniques ... Read Answer >>
  5. What does a hedge fund do?

    Read how hedge funds differ from other investment vehicles and how their investment strategies make them unique and potentially ... Read Answer >>
  6. Are there publicly traded hedge funds?

    See why a privately arranged hedge fund may decide to take its fund public, and how the investing public at large can gain ... Read Answer >>

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