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Hedge Funds

The term hedge funds  covers a large range of investment funds with a wide range of different investment t strategies,  normally including powers to go short and to use derivatives to achieve their objectives.  They do not necessarily hedge against adverse asset movements although this was the original meaning of the term ‘hedge fund’.       They normally charge performance fees as well as annual management fees.

The successful hedge funds have produced performance well in excess of market indices, but the average return on all hedge funds has not been impressive, whilst a few have failed and rather more have quietly gone out of business after failing to satisfy their investors.

A ‘safer’ way to invest is through a ‘fund of hedge funds’, but these carry two layers of management expenses.      An ETF (exchange traded fund) of hedge funds is planned, which may be an alternative  way of achieving spread.  definitions and strategies of hedge funds   a description of hedge funds from the BBC   jobs in hedge funds