Hedge Fund

A hedge fund is a lightly regulated pool of funds where a fund manager has flexibility in their investment strategies. Hedge fund managers are not constrained by the rules that apply to mutual funds or commodity funds.

They can take short positions, use derivatives for leverage and speculation, perform arbitrage transactions (which exploit price differentials in different markets or exchanges to make a profit), and invest in almost any situation in any market where they see an opportunity to achieve positive returns.

Hedge fund managers have tremendous flexibility in their strategies; their ability to select superior investments within the targeted strategy and relevant markets is more important for hedge funds than for almost any other managed product.