Finance - Hedge Funds

Hedge Funds

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The concept of a hedge fund is to hedge your bets against a market fall. As you can imagine, with over 7,000 funds in existence it is not easy to select a fund that fits your criteria as an individual investor. Therefore the concept of a hedge "fund of funds" reduces the risk of selecting a weak performer.

Hedge funds trade in anything that is tradable. This can include commodities, derivatives, as well as selling securities short or long in the markets. Though they have shown good returns over the last three years, they should only form part of an overall portfolio. Many institutions now offer a hedge fund of funds under an absolute return product name.