Here, the goal of the fund manager is to minimise market risks by investing in long/short equity funds, convertible bonds, arbitrage funds, and fixed income products.Īnother type includes event-driven funds that invest in stocks to take advantage of price movements generated by corporate events. Then there are funds that work on market-neutral strategies. One such strategy is global macros, where the fund takes long and short positions in large financial markets based on the views influenced by economic trends. There are many strategies a hedge fund may use to generate returns. They are not required to be registered with the securities markets regulator and are not subject to the reporting requirements, including periodic disclosure of NAVs. These funds work either as private investment partnerships or offshore investment corporations. As the name suggests, the fund tries to hedge risks to investor’s capital against market volatility by employing alternative investment approaches.ĭescription: Hedge fund investors typically include high net worth individuals (HNIs) and families, endowments and pension funds, insurance companies, and banks. Put simply, a hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities and derivative products to generate returns at reduced risk. Definition: Hedge fund is a private investment partnership and funds pool that uses varied and complex proprietary strategies and invests or trades in complex products, including listed and unlisted derivatives.
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