Hedge fund


    Hedge funds are a type of investment fund. Hedge funds invest in a diverse range of assets, but usually, they trade liquid securities on public markets. Some hedge funds have a net asset value of several billion dollars.

    They employ a wide range of investment and trading strategies and make use of techniques such as short selling and leverage.

    Hedge funds try to achieve a positive return on investment independent of whether the markets are rising or falling. Hedge fund managers typically invest their own money in the fund they manage, which serves to align their interests with the funds’ investors.

    A hedge fund typically pays its investment manager a management fee and a performance fee. The management fee is a percentage on the fund’s assets. The performance fee is a percentage on the increase of the fund’s value during the year.

    Because hedge funds are not sold on public markets and stock exchanges, they have historically not been subject to the same restrictions and regulations that other funds and financial instruments must adhere to. Regulations passed in the United States and Europe after the 2008 credit crisis are intended to increase government oversight of hedge funds and eliminate certain regulatory gaps.

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