Copyright © Philip M. Parker, INSEAD. Terms of Use.
Definition: Hedge Fund |
Hedge FundNoun1. A flexible investment company for a small number of large investors (usually the minimum investment is $1 million); can use high-risk techniques (not allowed for mutual funds) such a short-selling and heavy leveraging. Source: WordNet 1.7.1 Copyright © 2001 by Princeton University. All rights reserved. |
| Domain | Definitions |
Finance | A little-regulated private investment partnership for large investors. Source: European Union. (references) |
Source: compiled by the editor from various references; see credits. | |
(From Wikipedia, the free Encyclopedia)
In addition to selling short, Jones used leverage (borrowed money to trade in addition to the capital provided by his investors), changed an incentive fee (a fee based on a portion of the clients profits as opposed to a fixed percentage of assets) and had a substantial portion of his net worth in his investment funds -- all characteristics common in today's hedge funds.
One common hedge strategy is to buy shares of a company that is in the process of a merger and acquisition. The stock of the company has an announced price that it will be worth on the date of the merger, so if the stock is currently under that value, its a safe investment to purchase it and wait. The risk is that the merger will not go through and the stock will be left at its current value. Frequently, the trader will also sell the stock of the acquiring company in addition to buying the stock of the target.
Most of the early hedge funds did just this. They became very popular as a way of seeing gains better than the investment grade bond market, while still having low risk.
However the side effect of this popularity was to dramatically increase the interest in all of the non-standard investment strategies, and soon other funds were being set up with new strategies aimed primarily at high growth. Although there is no hedging in these cases, the term is still used for these funds as well.
A special type of hedge fund is a fund-of-funds, a fund which invests in other hedge funds rather than trading assets itself.
Hedge funds use alternative strategies such as selling short, arbitrage, trading options or derivatives, using leverage, investing in seemingly undervalued securities, and attempting to take advantage of the spread between current market price and the ultimate purchase price in situations such as mergers. They can be extremely risky investments as illustrated by the example of Long-Term Capital Management.
In the United States, regulations by the Securities and Exchange Commission do not allow hedge funds to be offered to the general public and the funds are limited to purchases by qualified investors, who have total incomes of over US$200,000 per year or a net worth of over US$1,000,000. For the funds, the trade off is that they have fewer investors to sell to, but they have few government imposed restrictions on their investment strategies. The presumption is, that hedge funds are pursuing more risky strategies, which may or may not be true depending on the fund, and that the ability to invest in these funds should be restricted to wealthier investors who are presumed to be more sophisticated. No evidence is cited for this assertion.Fund Strategies
Source: adapted by the editor from Wikipedia, the free encyclopedia under a copyleft GNU Free Documentation License (GFDL) from the article "Hedge fund."
Crosswords: Hedge Fund |
| Specialty definitions using "hedge fund": Hedge Fund Research. (references) |
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Source: compiled by the editor from various references; see credits. | |||
Expression using "hedge fund": Hedge Fund Research. Additional references. | |
| Source: compiled by the editor from various references; see credits. |
| The following statistics estimate the number of searches per day across the major English-language search engines as identified by various trade publications. Hyperlinks lead to commercial use of the expression at Amazon.com. |
| Expression | Frequency per Day |
hedge fund | 971 |
hedge fund job | 39 |
hedge fund manager | 32 |
hedge fund of funds | 26 |
hedge fund directory | 24 |
hedge fund definition | 22 |
starting a hedge fund | 20 |
hedge fund performance | 16 |
hedge fund strategy | 15 |
hedge fund research | 12 |
hedge fund accounting | 12 |
citadel hedge fund | 11 |
hedge fund marketing | 11 |
hedge fund index | 10 |
hedge fund information | 10 |
hedge fund news | 10 |
hedge fund database | 9 |
new york hedge fund | 9 |
hedge fund list | 9 |
start a hedge fund | 8 |
| Source: compiled by the editor from various references; see credits. | |
| Language | Translations for "hedge fund"; alternative meanings/domain in parentheses. | ||||||||||
Danish | hedge fund. (various references) | ||||||||||
Dutch | hedge fund. (various references) | ||||||||||
Finnish | sijoitusrahasto (fund, mutual fund, pooled investment, unit trust). (various references) | ||||||||||
French | fonds spéculatif, fonds d'investissement spéculatif. (various references) | ||||||||||
German | Hedge-Fund. (various references) | ||||||||||
Italian | hedge fund. (various references) | ||||||||||
Pig Latin | edgehay undfay fondo especulativo, fondo de inversión de alto riesgo, fondo de alto riesgo. (various references) | ||||||||||
Scrabble® Enable2K-Verified Anagrams | |
| Words within the letters "d-d-e-e-f-g-h-n-u" | |
-1 letter: unhedged. | |
-3 letters: defend, defund, dengue, denude, dudeen, duende, dunged, endued, fended, feuded, fudged, funded, hedged, nudged. | |
-4 letters: edged, ended, endue, feued, fudge, hedge, nudge, undee, unfed. | |
-5 letters: deed, dene, dude, dune, dung, edge, feed, fend, feud, fund, geed, gene, genu, ghee, gude, heed, hued, huge, hung, need, nude, unde. | |
| Source: compiled by the editor from various references; see credits. SCRABBLE® is a registered trademark. All intellectual property rights in and to the game are owned in the U.S.A and Canada by Hasbro Inc., and throughout the rest of the world by J.W. Spear & Sons Limited of Maidenhead, Berkshire, England, a subsidiary of Mattel Inc. Mattel and Spear are not affiliated with Hasbro. | |
Hexadecimal (or equivalents, 770AD-1900s) (references)48 65 64 67 65 46 75 6E 64 |
| Leonardo da Vinci (1452-1519; backwards) (references)
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Binary Code (1918-1938, probably earlier) (references)01001000 01100101 01100100 01100111 01100101 00100000 01000110 01110101 01101110 01100100 |
HTML Code (1990) (references)H e d g e   F u n d |
ISO 10646 (1991-1993) (references)0048 0065 0064 0067 0065 0046 0075 006E 0064 |
Encryption (beginner's substitution cypher): (references)4271707371240878070 |
| 1. Definition 2. Crosswords 3. Usage: Commercial 4. Expressions | 5. Expressions: Internet 6. Translations: Modern 7. Anagrams 8. Orthography | 9. Bibliography |
Copyright © Philip M. Parker, INSEAD. Terms of Use.
