Hedge Fund
Definition
What is Hedge Fund?
A privately offered pooled fund that may use leverageThe use of borrowed money or derivatives to increase exposure relative to invested capital., short sellingSelling a borrowed security with the intention of buying it back later., derivatives, and flexible strategies.
Example in practice
How This Looks in Practice
A hedge fund profits from both rising and falling securities through long-short positions.
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Related Terms
Money Market Fund
A mutual fund that invests mainly in short-term, relatively liquid instruments such as treasury bills and deposits.
Fund TypesEquity Fund
A fund that invests primarily in shares and seeks long-term capital growth.
Fund TypesFixed Income Fund
A fund focused on income-producing debt securities such as government and corporate bonds.
Investment MethodsLump-Sum Investment
A single, relatively large investment made at one time instead of through repeated contributions.