in simple words... what is exactly a hedge fund?

Answer 1

A high risk mutual fund. Here's the catch. By law only open to under 100 investors. Usually have a min opening balance of $1 Million. The manager will invest in things like 'Latin America Textiles' or 'Russian Futures'. Most investments are bizarre things a normal investor wouldn't consider. The purpose is to 'Hedge' risk by going against the grain. Most funds don't release a prospectus so to speak because the investors just hand off their money and expect a high return. It doesn't always work that way though. The fees are exorbitant. Most of the money made is by the manager selling short.

Answer 2

Generally, a hedge fund is a lightly regulated private investment fund often characterized by unconventional investment strategies and often making use of legal structures (sometimes offshore) to mitigate the effects of local regulation and tax regimes. In contrast to regular investment funds, which are usually limited to only being able to "go long" (buy) instruments such as bonds, equities or money markets, hedge funds also have the ability to "short" (sell) instruments which they believe will fall in price. In this way, hedge funds are able to create more complex investment structures which can, for example, profit in times of market volatility, or even in a falling market. They are primarily organized as limited partnerships, and previously were often simply called "limited partnerships" and were grouped with other similar partnerships such as those that invested in oil development. Hedge funds are normally open to institutional or otherwise accredited investors.

Answer 3

According to the definition I found, a hedge fund is a lightly regulated private investment fund often characterized by unconventional investment strategies and often making use of legal structures (sometimes offshore) to mitigate the effects of local regulation and tax regimes.

It is not a short definition because there seems to be a lot of details involved. See link for further clarification:

http://en.wikipedia.org/wiki/Hedge_fund
http://www.magnum.com/hedgefunds/abouthedgefunds.asp
http://www.investopedia.com/terms/h/hedgefund.asp

You may want to contact a investment broker to ask any additional questions you may have.

Hope this helps.

God Bless....

Answer 4

There are some severe flaws contained in the solutions offered right here. First, Hedge money have been initially created to offer a "hedge" against a definite marketplace . In different words, they looked for "absolute return," meaning they have been to look for a favorable return in any form of marketplace (bull or undergo), even with marketplace returns. 2nd, maximum hedge money are prepared "off shore" (or out of the U. S.) and as a result are actually not regulated by the SEC or NASD. as a result we've seen many hedge fund created of late that are actually not extremely "hedging" against something, yet attempt to offer dazzling returns (utilizing extremely some varieties or investment and derivatives) and could be seen extremely risky. yet, each and every hedge fund has an purpose, and a few are there to offer protection of capital (no longer unfastened earnings any year), a hedge against the inventory or bond marketplace (to offer beneficial returns while inventory or bond markets do no longer), or to take a place in option investment and supply return that may no longer be available in different markets. those money should not be put in the comparable class with the aid of fact the "risky, shoot the lights furniture out" money we see available immediately. Hedge money have been used for years by institutional traders (think of insurance firms, super business corporation's pension money, and US states public worker retirement classes) and those that are set up with sensible aims are very stable investments. There is likewise unquestionably a place for hedge earnings an traders portfolio as quickly as a definite point of journey and wealth is won. In different words, genuine "hedge money" get a bad call from the money available that are risky and finally end up collapsing. wish this permits!

Answer 5

A hedge fund is like a mutual fund. But this particular mutual fund is not restricted to buying certain categories of investments (large cap, small cap, domestic, growth....). Hedge funds specialize in arbitrage. This means they are buying something at one price knowing they can sell it at another price, thus giving a guaranteed profit.

Answer 6

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Answer 7

It is an accountant that a homeowner deposits money until they have enough to buy the privacy shrubbery that they need.

Answer 8

a fund that specializes in selling short.

Answer 9

Here are several definitions; reading through more than one definition may give you a better idea: