Hedge Funds ...
A hedge fund is private, largely unregulated pool of capital.
Hedge funds embrace a wide variety of skills and strategies. The return achieved by a given hedge fund manager will (in theory) largely be driven by that manager's ability (or skill), rather than by underlying economic or market conditions.
They offer the potential to achieve investment returns with relatively low volatility and largely unrelated to whether a particular investment market (such as shares or bonds) is going up or down.
Risks
Investing in hedge fund involves a high degree of risk.
- Funds often engage in leveraging and other speculative investment practices that may increase the risk of investment loss
- They can be highly illiquid meaning it may be difficult to sell the fund should an investor decide to do so
- As they are not regulated, hedge funds are not required to provide pricing information or valuations to investors
- It may be difficult to obtain information on the underlying investments held within the fund or their value
- Hedge funds often charge very high fees , which may offset any out-performance achieved by the manager
- Performance can be very volatile and an investor could lose all, or a substantial amount, of his or her investment