What is hedge fund please?

How is hedge fund is used? Details please

A hedge fund is a fund that uses hedging strategies. A fund can be limited to a particular strategy or multiple strategies. A fund of funds invests in other funds rather than managing the money itself and can also focus on one strategy or multiple strategies.

There are many types of strategies, but here are a few (some may overlap): arbitrage, distressed, long/short, emerging markets, event-driven, macroeconomic, market neutral, opportunistic, short selling, special situations.

For example, a market neutral fund attempts to avoid negative returns and may be long and short on the same stock or similar stocks. An event-driven hedge fund may focus on buying stocks and derivatives (e.g. call options) of companies that are facing bankruptcy or are takeover targets.

There are many investment vehicles hedge funds can use, but here are a few (some may overlap): stocks, bonds, margin (short selling and borrowing), options, swaps, private equity, currency, commodities, asset-backed securities, futures, forwards, and other derivatives.

As you might imagine, there can be some risky investments. Hedge fund managers can charge hefty fees and hedge funds are generally limited to sophisticated investors.

Case in point, two Bear Stearns hedge funds recently got in trouble for placing heavy bets on securities backed by subprime mortgages. Of course, there are hedge funds that have had remarkable returns as well.

If you're looking to research hedge funds, you're out of luck for the most part. Because most hedge funds are private, they're not required to report performance data. There are groups attempting to compile databases of hedge fund information, but even that data can be unreliable. Worst still, transparency is an issue where you may not even be able to get all the info you want from the hedge fund itself.

Try this site..

http://bonds-mutual-funds.superiorinvest...