Hedge fund - Financial definition
Concise definition of the term hedge fund
A hedge fund is an investment fund managed by professional managers that seeks to generate returns through various strategies, including leveraging, derivatives, and alternative investments.
Comprehensive definition of the term hedge fund
Hedge funds are pooled investment vehicles managed by professional investment managers, typically using advanced and often speculative strategies aimed at generating high returns for their investors. Unlike traditional investment funds, hedge funds often have greater flexibility in their investment approach, allowing them to use leverage, short-selling, derivatives, and other sophisticated techniques to potentially profit from both rising and falling markets.
While hedge funds cater primarily to institutional investors and high-net-worth individuals, they have gained prominence in financial markets due to their ability to offer diversification, absolute return strategies, and unique investment opportunities. Some well-known hedge fund strategies include long-short equity, global macro, event-driven, and quantitative trading, each with its own risk-return profile and investment objectives.