The main purpose of this site is to provide a directory of information about Hedge Funds. Presently, this consists of a directory of recent articles on hedge funds and links to other related resources such as books. The directory is arranged both topically and chronologically. Check here regularly for updated information. In time, we will add other resources such as a discussion group and an archive of hedge fund-related information.

What Are Hedge Funds?

Hedge funds are pooled investment vehicles, which are commonly set up as limited partnerships in which the manager acts as the general partner while the investors act as the limited partners.

In order to mitigate a particular type of risk, a money manager employs a particular risk management or hedging technique. For example, the market risk can be hedged against by selling a broad collection of securities short in equal proportion to one’s long exposure or by buying put options on an index.

One may hedge against factors like interest rate, inflation, currency, and the tools and techniques of hedging include raising cash, selling short, buying or selling options, futures, commodity and/or currency futures.

Reducing Investment Risk

A private investment partnership, hedge funds also tend to be skill-based investment strategies that attempt to obtain returns based on a unique skill or strategy.

They can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in any opportunity in any market where they foresee impressive gains at reduced risk.

The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions. They design strategies to reduce investment risk using call options, put options, short selling, or futures contracts. Thus, the hedge insures against the possibility for a future loss.

Hedge fund managers adopt different strategies to multiply the returns on investment. They invest both long and short, in the securities of companies, which are expected to change in price over a short period of time due to an unusual event. By pairing individual long positions with related short positions, market-level risk is greatly reduced.