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Home » HEDGE FUNDS

What is a Hedge Fund?

hedge-fund-investors-manager-investmentOver the last 10 years, the media has become obsessed with the emergence and growth of the hedge fund market. You take a look in the paper, and hedge funds are making the top headlines. You turn on CNBC, and they’re discussing hedge funds and institutional investing.  With this constant overload of information, you can’t help but ask, “What’s the buzz all about”?

Though almost everyone has heard of the term “hedge fund”, unfortunately, most people don’t REALLY know what it means?  To help spread the truth and clear up any misconceptions, we decided to explain this topic in detail.

A hedge fund is a private investment fund that invests in various assets such as securities, commodities, currencies, and derivatives, all on behalf of its investors. Hedge funds are usually open to a limited range of investors, and some funds can have Billions under management. Typically, the investor pays a performance fee to the hedge fund manager, which is typically their main source of compensation.  For more information on fees, click on Fees for Hedge Fund Investments.

Despite the common misconception, hedge funds are NOT all the same. Each hedge fund has its own investment strategy, and in fact, some funds can be as different as night and day.  For example, there are some hedge funds that ONLY short-sell equity markets after news releases.  On the other hand, there are some hedge funds that ONLY invest in commodities or eco-friendly stocks.  As you can see, hedge funds can be different in every area except one, their goal to profit.

As you may know, hedge funds typically produce higher yields than traditional investments. This is because most hedge funds are private, which allows them to invest in almost any market condition.  For example, hedge funds can legally short-sell when the market is going down, and many mutual funds can not.  This allows hedge fund managers to profit in markets that are growing AND declining, greatly increasing their potential yields.

Though profit is everyone’s goal, negative media attention has lead many to question the economic impact of hedge funds. The real truth is, hedge funds are a tool of the ultra-wealthy, and they play an important role in the world economy.  Without hedge funds, many businesses would NEVER be funded and our investment markets would be far more illiquid. Unfortunately, since hedge funds can produce far higher yields than the rest of the market, they will continue to be a scapegoat for years to come.

Now that you understand the characteristics of a hedge fund, it may be time to dig a little deeper. To do so, scroll down and take a look at the list of Related Articles. Also, if you would like to watch a good video, click on “Billionaire Hedge Fund Managers”.  It is an EYE-OPENING presentation which demonstrates the most profitable investment structure in the world, the hedge fund.

InsideTrade LLC Staff

Phone: (949) 444-2111

9 Comments »

  • Jack Pierce said:

    Are hedge funds still worth investing in? I know they are all different but does anyone have any hedge fund connections to look at? I am an investor with 720k and wanted to look at everything, even though I was looking at private placement first. Thanks in advance.

  • Hedge Fund Management, a Crash Course (Video) | InsideTrade LLC said:

    [...] Rules for Investors and Lock Up Money if it is Reasonable 13.  Panic from Volatile Markets Forces Hedge Funds to Sell Assets at the Wrong Time and Lose [...]

  • Highest Paid Hedge Fund Managers (Video) | InsideTrade LLC said:

    [...] Average in 2007 2. Top 5 Hedge Managers Made more than Value of Bear Stearns 3. Over Last 5 Years Hedge Fund Manager Income has Grown 1000% 4. Why Can Hedge Fund Managers Make so Much Money? 5. Hedge Funds [...]

  • Understanding Fees for Hedge Fund Investments | InsideTrade LLC said:

    [...] Hedge Fund [...]

  • DUANE BERRY said:

    Jack,

    Give me a call. I have the right exit startegy for you

    Duane Berry
    313-740-5062
    ezpivot@yahoo.com

  • Ilja Kipnis said:

    I can also propose you high yield investments over our swiss platform. send me your mail at kredit2009@googlemail.com
    Ilja Kipnis

  • Understanding Hedge Fund Investment Strategies | InsideTrade LLC said:

    [...] the portrait the media may paint, all hedge funds are not the same. In fact, every hedge fund has its own secret sauce which defines its goals, [...]

  • a r prasad said:

    dear sir, can i have tips for eur/usd please as i am trading forex.

  • Klaus Oldigs said:

    Hedge-Fund? Managed Pamm Account? Managed Futures Account? Forex Trading? What is the best choice? If you are interested in looking at a few really good and verified performance records over the years and watch the fresh monthly up-dates coming in for a while before you make a decison you may click here http://www.forexhandelprofite.de or write me at klaus.oldigs@t-online.de. I made some fine selections worthwhile considering. There will be definitively something available which will please you. And here is my English website http://www.oldigs.com

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