What is a hedge fundf?

Question

What is a hedge fundf?

Answer 1

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 2

A hedge fund is a fund that can & wil invest in any asset class. It is called a hedge fund as opposed to a traditional fund that woud not be able to invest in a falling stock market. A hedge fund will be investing in an asset class that should go up as equities go down. One example would be going short.

Answer 3

hedge fund is a private, largely unregulated pool of capital whose managers can buy or sell any assets, bet on falling as well as rising assets, and participate substantially in profits from money invested. It charges both a performance fee and a management fee. Typically open only to qualified investors, hedge fund activity in the public securities markets has grown substantially, accounting for approximately 10% of all U.S. fixed-income security transactions, 35% of U.S. activity in derivatives with investment-grade ratings, 55% of the trading volume for emerging-market bonds, and 30% of equity trades.[citation needed] Hedge Funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt.