Hedge Funds: What They Do
Hedge funds are investment partnerships that pool funds from private investors and are managed by professional fund managers who use a wide range of strategies to maximize returns and eliminate risk with hedging strategies. Unlike mutual funds, hedge funds are generally considered more aggressive, risky, and exclusive, and they typically have more flexible investment strategies, including leveraging assets, investing in derivatives such as options and futures, and using short-selling and other speculative investment practices not often used by mutual funds. Hedge funds aim to achieve the greatest possible returns and take the greatest risks while trying to achieve them. They are structured as open-end funds, allowing investors to contribute money at any time, with withdrawals taking place at certain times. Hedge funds also contribute to the efficiency and liquidity of financial markets and are regulated and supervised by various government agencies in the United States and internationally.
