Sunday Emmanuel

@sundayemmanuel · 22 Nov 2021

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What is a hedge fund?

This is an offshore investment fund typically formed as a private limited partnership that engages in speculation using credit or borrowed capital. It is a type of actively managed fund that focuses on high-risk high-return investment. Hedge funds invest very aggressively using leverage and shorting to try and
increase their returns.

Main points about Hedge funds:

- They actively managed alternative investments that typically use non-traditional and risky investment strategies or assets classes.

- They charge much higher fees than conventional investment funds and require a high minimum deposit.

- The number of hedge funds has been growing by approximately 2.5% over the past five years
but remain controversial.

- They were celebrated for their market-beating performance in the 1990s and early 2000s, but
many have underperformed since the financial crises of 2007-2008 especially after fees and
taxes are factored in.

Major characteristics of Hedge funds

- Hedge funds exclude small investors.

- Hedge funds managers have a wide latitude that is, they can invest in anything.

- Hedge funds often use leverage, they use borrowed money to amplify their returns.

Examples of Hedge funds investment
- Paul Singer’s Elliott Management Corporation.

- New York's Two Sigma Investment.

- James H. Simon's Renaissance Technologies.

- AQR Capital Investment.

- Ray Dalio’s Bridgewater Associates.