What is Hedge Fund?
The definition of hedge fund is that it is an investment medium and business assemblies which is responsible for grouping capital from numerous investors and invest the acquired capital in securities and other financial instruments. The main motive of hedge fund is to optimize the returns to the investors and minimize the risk factors. Hedge fund is a financial instrument which is obtainable only to erudite investors.
Hedge fund holds its own separate characteristics; it has wider investment autonomy as it involves investment in any financial instruments like real estate, stocks, bonds etc. It has the upper hand of high salary and opportunity and it primarily uses borrowed money to intensify the returns to the investors. Hedge funds are registered under security and exchange commission.
Hedge fund managers are the people who invest their capital in the fund they manage by themselves. He oversees and decides about the amount of investments in hedge funds. A successful hedge fund manager possesses the quality of measuring competitive benefit, well-defined investment and risk management strategy and research activities.
Hedge fund uses various strategies as well. Some of the famous strategies of hedge funds are, equity hedge, which deals with long term and short term equity; market neutral, which deals with minimizing contact to the broad market; global macro, which involves highest risk as well as return; relative value arbitrage, which is a comprehension for different strategies used with broad collection of securities. The trend of hedge fund is growing and information regarding hedge fund is abundant in global news.
Bridgewater associates LP is the top hedge fund firm with about 1400 employees and roughly manages about $ 150 billion global investment which is expanded past governments, corporate and pension funds, official clients, central banks with $87.1 billion hedge fund management which has made it the major hedge fund managing organization.