hedge funds
Pooled investment vehicles
Hedge funds are investment pools that use aggressive strategies—short selling, leverage, derivatives—to generate returns regardless of market direction.
Unlike mutual funds, they face fewer regulations and typically require large minimum investments, serving wealthy individuals and institutions.
The name comes from "hedging" against market losses, though modern hedge funds often embrace rather than minimize risk.
The hedge fund collapsed when its bets on subprime mortgages went wrong.
Deploying capital for returns
- portfolioCollected works or assets
- capitalWealth used for investment
- securitiesTradeable financial assets
- arbitrageExploiting price discrepancies
leverage · institutional · assets · equity · derivatives · trading · liquidity · benchmark
Identifying and minimizing threats
- short sellingSelling borrowed securities
- leverageBorrowed capital for amplified returns
- arbitrageExploiting price discrepancies
- derivativesThings derived from another
options · futures · swaps · alpha · stop-loss · macro · event-driven · algorithmic trading
Gain exceeding expenditure
- capital gainsProfit from asset sales
- outperformanceExceeding a comparison standard
- alphaFirst Greek letter
- yieldProduce or relinquish
appreciation · growth · speculation · risk-taking · ROI · carry · high-water mark · annualized
Superior select group
- affluentHaving abundant financial resources
- institutionalOf formal establishments
- privateRestricted to certain parties
- restrictedLimited in scope
minimum investment · limited partnership · gated · endowment
investment
Deploying capital for returns
- portfolioCollected works or assets
- capitalWealth used for investment
- securitiesTradeable financial assets
arbitrage · leverage · institutional · assets · equity · derivatives · trading · liquidity · benchmark · diversification
risk management
Identifying and minimizing threats
- short sellingSelling borrowed securities
- leverageBorrowed capital for amplified returns
- arbitrageExploiting price discrepancies
derivatives · options · futures · swaps · alpha · stop-loss · macro · event-driven · algorithmic trading · momentum
profit
Gain exceeding expenditure
- capital gainsProfit from asset sales
- outperformanceExceeding a comparison standard
- alphaFirst Greek letter
yield · appreciation · growth · speculation · risk-taking · ROI · carry · high-water mark · annualized · compounding
elite
Superior select group
- affluentHaving abundant financial resources
- institutionalOf formal establishments
- privateRestricted to certain parties
restricted · minimum investment · limited partnership · gated · endowment
- global financeinternational banking, financial hubs, central banks, capital flows, exchange rates
- financial lawsecurities law, insurance law, SEC, Dodd-Frank, insider trading
- assetsproperty, cash, money, investments, bank accounts
- financebank, CFO, banks, controller, finance
- competitive organizationssports teams, corporations, political parties, sports leagues, tech companies
- high societygossip, socialites, socialite, aristocrats, aristocrat
hedge fundsindex funds
Securities mirroring market indices
mutual funds · exchange-traded funds · 401(k) plans · savings accounts · robo-advisors
hedge fundssavings accounts
Interest-bearing bank deposits
certificates of deposit · money market funds · index funds · government bonds · blue-chip stocks
fund, hedge, funding, fundamental, funded, hedgehog, hedges, fundamentally, hedging