Hedge Fund

Search for glossary terms (regular expression allowed)


Term Definition
Hedge Fund

An investment pool using complex strategies to maximize returns and minimize risks, often with high fees and restrictions for investors.

hedge fund is a pooled investment fund that typically involves:

  • High minimum investment: Generally only accessible to accredited investors with substantial assets.
  • Aggressive, complex investment strategies: Utilizes techniques like leverageshort selling, and derivatives to potentially achieve higher returns than traditional investments, but also carries higher risks.
  • Limited transparency: Operates with less disclosure than mutual funds, making it harder for investors to fully understand their holdings and strategies.
  • High fees: Often charges both a management fee (based on assets under management) and a performance fee (based on profits generated).

Here are some key points to remember about hedge funds:

  • Not for everyone: Due to their complexity, risk, and high cost, they are not suitable for all investors.
  • Variety of strategies: Numerous hedge funds exist, each employing different strategies focused on specific markets or asset classes.
  • Scrutiny and controversy: Their lack of transparency and high fees have attracted criticism and regulatory scrutiny.
  • Potential for high returns: While risky, they can offer the potential for significant returns that traditional investments may not.