Hedge fund

A hedge fund, like a mutual fund, is a pool of assets used to invest in various securities. However, a hedge fund, unlike a mutual fund, has non-standard investment objectives and is not regulated. It can therefore undertake different, more aggressive strategies that mutual funds cannot. A hedge fund’s clients tend to be institutional investors, since there is usually a minimum investment for a client, that can lie anywhere between USD 250,000 and USD 1,000,000.

The manager of a hedge fund needs to be compensated with performance fees to align his interests with that of investors. For detailed hedge fund strategies see the following: long/short, global, macro, directional, long-only, short-only, long-bias, short-bias, event driven, relative value, arbitrage, fund of hedge funds, multi-strategy and commodity trading adviser (CTA). See also strategy, 130-30.