hedge fund


hedge fund
An investment vehicle that somewhat resembles a mutual fund, but with a number of important differences. If the fund is "off-shore", the fund does not have to adhere to any SEC regulations (and can only sell to non-U.S. investors or investment vehicles). These funds employ a number of different strategies that are not usually found in mutual funds. The term " hedge" can actually be misleading. The traditional hedge fund is actually hedged. For example, a fund employing a long-short strategy would try to select the best securities for purchase and the worst for short sale. The combination of longs and short provides a natural hedge to market-wide shocks. However, much more common are funds that are not hedged. There are funds that are long-biased and short-biased. There are funds that undertake high frequency futures strategies, sometimes called managed futures. There are funds that take long-term macroeconomic bets, sometimes called global macro. There are funds that try to capitalize on merger and acquisitions. Another distinguishing feature of hedge funds is the way that managers are rewarded. There are two fees: fixed and variable. The fixed fee is a percentage of asset under management. The variable or performance fee is a percentage of the profit of the fund. There are also funds of funds which invest in a portfolio of hedge funds. Another important difference with hedge funds is that the minimum required investment is usually quite large and, as a result, minimizes the participation of retail investors. Bloomberg Financial Dictionary

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hedge fund hedge fund fund1

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   A private investment fund which typically aims to produce high returns from rapid, short-term market movements, often by taking very leveraged positions and using aggressive strategies such as short selling, swaps, derivatives, program trading and arbitrage. Usually restricted to financial institutions and wealthy individuals.

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hedge fund UK US noun [C] FINANCE, STOCK MARKET
an investment fund that trades large amounts of shares, currencies, etc. to take advantage of both rising and falling prices, for example by shorting (= borrowing shares, etc., selling them, and buying them back at a lower price): »

Managers of the first hedge funds invented ways to make money no matter which way the stock market was moving.

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The Senate Judiciary Committee met yesterday to discuss the growing problem of hedge funds accused of wrongdoing in the marketplace.

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hedge fund investors/managers

See also MACRO HEDGE FUND(Cf. ↑macro hedge fund)

Financial and business terms. 2012.

Look at other dictionaries:

  • hedge fund — see fund 2 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. hedge fund n. A mutual fun …   Law dictionary

  • Hedge fund — n. (Finance) a mutual fund or partnership of investors who pool large sums of money to speculate in securities, increasing the risk of such activity by using borrowed money to leverage the investments, or by selling short. [PJC] …   The Collaborative International Dictionary of English

  • hedge fund — hedge funds N COUNT A hedge fund is an investment fund that invests large amounts of money using methods that involve a lot of risk …   English dictionary

  • hedge fund — hedge′ fund n. bus an open end investment company organized as a limited partnership and using high risk speculative methods to obtain large profits • Etymology: 1965–70 …   From formal English to slang

  • hedge fund — ☆ hedge fund n. a partnership of investors who pool large sums for speculating in securities, often taking large risks, as by buying with borrowed funds or selling short …   English World dictionary

  • Hedge fund — A hedge fund is a private investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment funds and which pays a performance fee to its investment manager.… …   Wikipedia

  • Hedge fund — Hedgefonds (von engl. to hedge [hɛdʒ], „absichern“, engl. hedge fund; selten SAIV sophisticated alternative investment vehicle, engl. etwa für ausgefeiltes/anspruchsvolles alternatives Investitionsvehikel) sind eine spezielle Art von… …   Deutsch Wikipedia

  • Hedge fund — A fund that may employ a variety of techniques to enhance returns, such as both buying and shorting stocks based on a valuation model. The New York Times Financial Glossary * * * hedge fund hedge fund ➔ fund1 * * *    A private investment fund… …   Financial and business terms

  • hedge fund — noun a flexible investment company for a small number of large investors (usually the minimum investment is $1 million); can use high risk techniques (not allowed for mutual funds) such as short selling and heavy leveraging • Syn: ↑hedgefund •… …   Useful english dictionary

  • Hedge Fund — An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an… …   Investment dictionary


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