What is a hedge fund?

Question

Can someone explain it to me in simple terms please? Thanks

Answer 1

It's like any other mutual fund, but is exempt from some of the government rules regarding how risky the investments can be.  It's higher risk, but possibly higher reward.  Ok, let's say they buy 1000 stocks at $10, but then it falls down to $5, so what you do is buy another 1000.  That way, your price point is $7.50 per share.  If the stock only makes it back to $8, then you are still profitting.  To my understanding, they "hedge" potential losses by making buys this sort of way, but I could be wrong.

Answer 2

Hedge funds are private investment funds with a certain criteria to accept investors. They are unregulated and limited to their number of investors, unlike mutual funds that are regulated by the SEC and virtually unlimited in the number of investors they accept. Although mutual funds do close to new investors at times. Mutual funds invest in stocks and bonds. Hedge funds invest in every part of the financial markets. stocks, bonds, commodities, currencies, futures and other things. And they can take long and short positions in any investment. So they can create complex hedging strategies. But they also use large degrees of leverage, with borrowed money, which create a great deal of risk. Mutual funds seek relative returns. Returns relative to an index such as the S&P 500. They seek to do better than the index, but that doesnt mean a positive return. Hedge funds seek absolute returns, positive returns no matter what the market does. Hedge funds typically charge a 2 percent management fee, and take 20 percent of the profits.

Answer 3

When a bush gets a savings account