What Is A Hedge Fund?

[motega]

hedge fund mutual fund

[Montay]

I am which includes a URL from wikipedia that explains this subject better than I can in this small space.  Be aware that there are many sources of education on this subject at your nearby library that can support you not only learn the generalities of Hedge Funds, but also investment sources as well.   http://en.wikipedia.org/wiki/Hedge_fund   "The E?Ville Librarian"

[Vic]

Excellent Write-up from NY Mag This post from New York Magazine gives a good simple overview. "According to Cliff Asness of AQR Capital, ?Hedge funds are investment pools that are reasonably unconstrained in what they do. They are comparatively unregulated(for now), charge quite high fees, will not necessarily give you your money back when you want it, and will usually not tell you what they do. They are supposed to make cash all the time, and when they fail at this, their investors redeem and go to somebody else who has not too long ago been creating money. Every single 3 or 4 years, they deliver a 1-in-a-hundred-year flood.? The SEC also offers a excellent definition. I hope that these sources assist.  S. Petruso Librarian Anne Arundel County Public Library http://askusnow.info/ Sources: New York Magazine, SEC viaggiatore 76 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.

[williamsjones953]

Hedge funds are that funds which are invested by group of investors in sake of getting a high capital gain. It is very risky and can only be handled by professional fund manager of company. It is just similar as mutual funds but they differ from each other in fee structures. Hedge fund are take use of arbitrage, buy and sell undervalued securities, trade options or bonds etc. If you want to know more guidance about hedge funds then check details here: http://focusedfinancialsystems.com/

[Shann]

This report from New York Magazine offers a excellent basic overview. "According to Cliff Asness of AQR Capital, ?Hedge funds are investment pools that are reasonably unconstrained in what they do. They are comparatively unregulated(for now), charge quite higher fees, will not necessarily give you your money back when you want it, and will usually not tell you what they do. They are supposed to make cash all the time, and when they fail at this, their investors redeem and go to an individual else who has not too long ago been making money. Each 3 or 4 years, they deliver a a single-in-a-hundred-year flood.? The SEC also offers a very good definition. I hope that these sources assist.  S. Petruso Librarian Anne Arundel County Public Library http://askusnow.info/

[delrico]

It's a mutual fund for rich people A mutual fund is a bunch of people putting money together in a pot.  That pot is used to buy investments(stocks, bonds, real estate).  You're allowed to cash out of it proportional to how much you put in, and new investors are pro-rated depending on the past performance.  Mutual funds are regulated by the SEC to keep investors from getting ripped off, and certain kinds of highly risky investments are forbidden. A hedge fund is much like that, except that it's allowed to take much bigger risks than a mutual fund is.  All of the investors have to be "accredited", which means that they can prove that they're so rich that they can afford to take a loss if the risks don't pay off.  Basically, you have to be a millionaire. They're called "hedge funds" because they take advantage of a lot of "hedging" strategies.  "Hedging" is a way of spreading around risk.  Here's an example: you own a stock worth $50.  You think it will go up, but you're afraid it will go down. So you pay me $1 to say, "no matter what, I'll buy it from you for $40."  You've just hedged your risk: no matter how far it falls, you can sell it to me for $40.  If it falls to $20, I lose: I have to buy it for $40 and it's only worth $20.  But if it doesn't fall, I'm up $1 for doing absolutely nothing at all.  It's free money.  The contract we made is called a "derivative", since we're not actually trading the stock, but you're really just paying me to assume the risk. The value is "derived" from the stock but isn't the stock itself.  There are lots of other kinds of derivatives, some of which have even bigger risks and bigger payoffs than the one I just described. The name of the game is taking big risks for big rewards.  The rich(who can afford to take the risks) get richer.  The best the rest of us can do is to invest in mutual funds, which aren't allowed to invest in derivatives. The hedge funds provide a valuable service.  Lots of people have risk that they'd happily pay other people to take.  Most obvious are farmers, who will pay other people to take the risk of crop failure. (That's what the commodities futures market is all about.)  That's how farmers survive bad years, so we still have farms next year.  But since hedge funds take huge risks, they sometimes get massively hosed.  And sometimes it's not just the people who took the risks directly who get screwed by that.  If a hedge fund has to sell off a lot of what it owns all at once to cover a failure, it can depress the whole stock market.  So they keep trying to figure out ways to prevent hedge funds from getting so big that they become too risky for everybody.  It's hard, though, because hedge funds start big(since they only take money from millionaires) and get even bigger(because the risks they take are so rewarding.) PamPerdue 76 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.

[Vontell]

Private investment fund open to only a very limited number of qualified investors. A hedge fund is a private investment fund charging a performance fee and typically open to only a very limited range of qualified investors. In the United States, hedge funds are open to accredited investors only. Because of this restriction, they are usually exempt from any direct regulation by the SEC, NASD and other regulatory bodies. A hedge fund's activities are limited only by the contracts governing the particular fund, so they can follow complex investment strategies, being long or short assets and entering into futures, swaps and other derivative contracts. They often hedge their investments against adverse moves in equity and other markets, because a common objective is to generate returns that are not closely correlated to those of the broader financial markets. In most countries hedge funds are prohibited from marketing to non-accredited investors, unlike regulated retail investment funds such as mutual funds and pension funds. As hedge funds are essentially a private pool of managed assets, and as their public access is commonly restricted by the government, they have little to no incentive to release their private information to the public. Inarguably private entities, hedge funds have a corresponding reputation for secrecy, and less is known about the methods and activities of hedge funds than about publicly-accessible "retail" funds. However, since hedge fund assets can run into many billions of dollars, and thus their sway over markets?whether they succeed or fail?is substantial, there have been calls for regulation of these private investment funds. Sources: http://en.wikipedia.org/wiki/Hedge_fund mr-newbie 76 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.

[Barry]

A mutual fund is a bunch of people putting money together in a pot.  That pot is used to buy investments(stocks, bonds, real estate).  You're allowed to cash out of it proportional to how much you put in, and new investors are pro-rated depending on the past performance.  Mutual funds are regulated by the SEC to keep investors from getting ripped off, and certain kinds of highly risky investments are forbidden. A hedge fund is much like that, except that it's allowed to take much bigger risks than a mutual fund is.  All of the investors have to be "accredited", which means that they can prove that they're so rich that they can afford to take a loss if the risks don't pay off.  Basically, you have to be a millionaire. They're called "hedge funds" because they take advantage of a lot of "hedging" strategies.  "Hedging" is a way of spreading around risk.  Here's an example: you own a stock worth $50.  You think it will go up, but you're afraid it will go down. So you pay me $1 to say, "no matter what, I'll buy it from you for $40."  You've just hedged your risk: no matter how far it falls, you can sell it to me for $40.  If it falls to $20, I lose: I have to buy it for $40 and it's only worth $20.  But if it doesn't fall, I'm up $1 for doing absolutely nothing at all.  It's free money.  The contract we made is called a "derivative", since we're not actually trading the stock, but you're really just paying me to assume the risk. The value is "derived" from the stock but isn't the stock itself.  There are lots of other kinds of derivatives, some of which have even bigger risks and bigger payoffs than the one I just described. The name of the game is taking big risks for big rewards.  The rich(who can afford to take the risks) get richer.  The best the rest of us can do is to invest in mutual funds, which aren't allowed to invest in derivatives. The hedge funds provide a valuable service.  Lots of people have risk that they'd happily pay other people to take.  Most obvious are farmers, who will pay other people to take the risk of crop failure. (That's what the commodities futures market is all about.)  That's how farmers survive bad years, so we still have farms next year.  But since hedge funds take huge risks, they sometimes get massively hosed.  And sometimes it's not just the people who took the risks directly who get screwed by that.  If a hedge fund has to sell off a lot of what it owns all at once to cover a failure, it can depress the whole stock market.  So they keep trying to figure out ways to prevent hedge funds from getting so big that they become too risky for everybody.  It's hard, though, because hedge funds start big(since they only take money from millionaires) and get even bigger(because the risks they take are so rewarding.)

[Nickolaus]

A hedge fund is a private investment fund charging a performance fee and typically open to only a very limited range of qualified investors. In the United States, hedge funds are open to accredited investors only. Because of this restriction, they are usually exempt from any direct regulation by the SEC, NASD and other regulatory bodies. A hedge fund's activities are limited only by the contracts governing the particular fund, so they can follow complex investment strategies, being long or short assets and entering into futures, swaps and other derivative contracts. They often hedge their investments against adverse moves in equity and other markets, because a common objective is to generate returns that are not closely correlated to those of the broader financial markets. In most countries hedge funds are prohibited from marketing to non-accredited investors, unlike regulated retail investment funds such as mutual funds and pension funds. As hedge funds are essentially a private pool of managed assets, and as their public access is commonly restricted by the government, they have little to no incentive to release their private information to the public. Inarguably private entities, hedge funds have a corresponding reputation for secrecy, and less is known about the methods and activities of hedge funds than about publicly-accessible "retail" funds. However, since hedge fund assets can run into many billions of dollars, and thus their sway over markets?whether they succeed or fail?is substantial, there have been calls for regulation of these private investment funds.

[Jazmina]

When in doubt ... look it up I am including a URL from wikipedia that explains this subject better than I can in this small space.  Be aware that there are many sources of education on this subject at your local library that can help you not only learn the generalities of Hedge Funds, but also investment sources as well.   http://en.wikipedia.org/wiki/Hedge_fund   "The E?Ville Librarian" EVille_Librarian 76 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.