Hedge Fund

A hedge fund is an investment fund that pools capital from accredited investors or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk management techniques. It is administered by a professional investment management firm, and often structured as a limited partnership, limited liability company, or similar vehicle. Hedge funds are generally distinct from mutual funds, as their use of leverage is not capped by regulators, and distinct from private equity funds, as the majority of hedge funds invest in relatively liquid assets.

History of Hedge Funds

The first hedge fund was established in 1949 by Alfred Winslow Jones. Jones was a journalist who had written an article in Fortune magazine in 1946, in which he outlined the idea of a hedge fund. He believed that by combining the long and short positions of stocks, he could reduce the risk of the portfolio while still achieving a higher return than the market. Jones was able to attract investors to his fund, and it quickly became a success. Since then, hedge funds have grown in popularity, and today there are thousands of hedge funds around the world.

Comparison of Hedge Funds

Summary

Hedge funds are an investment vehicle that pools capital from accredited investors or institutional investors and invests in a variety of assets. They are distinct from mutual funds and private equity funds, as they use leverage and invest in relatively liquid assets. Hedge funds have grown in popularity since their inception in 1949, and today there are thousands of hedge funds around the world. For more information about hedge funds, investors can visit websites such as Investopedia, The Balance, and Hedge Fund Research.

See Also

• Mutual Fund
• Private Equity Fund
• Portfolio Management
• Risk Management
• Leverage
• Liquidity
• Investment Management
• Limited Partnership
• Limited Liability Company
• Alfred Winslow Jones

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