A Jargon-Free Guide to Hedge Funds

you are not alone. Part of their allure is their exclusivity and secrecy.

If you’re confused about the question “what is a  hedge fund?”

While hedge funds are considered unique investments in the world of personal finance, in simple terms,

they are nothing more than an investment vehicle similar to a mutual fund.

The difference is that the fund manager has broader discretion to invest in a wider variety of financial products.

The popularity of hedge funds has exploded over the last few decades, and there are now almost 4 trillion dollars invested.

What Is A Hedge Fund?

At its most basic, a hedge fund is a partnership between a professional fund manager and investors.

If this sounds a lot like an actively managed mutual fund, you’re  not wrong.

The main difference between a mutual fund and a hedge fund is the amount of risk and diversity of products that a hedge fund can invest in.

Hedge Fund Strategies

While there are hundreds of strategies employed by hedge funds to generate returns for their investors, most can be grouped into four main categories.

Global Macro Strategy

Hedge funds implementing a global macro strategy look at the big picture trends worldwide and attempt to capitalize on these large-scale ideas.

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