Friday, December 3, 2010

Hedge Fund

Hedge Fund: A hedge fund takes positions in a wide range of securities and markets with the aim of generating high total returns. Often hedge funds will charge a "2-20 fee" which is a 2% management fee based on funds under management, and a 20% performance fee based on the returns generated by the fund manager. Hedge funds generally operate with a wider or more flexible mandate than most traditional mutual funds; they are allowed to use leverage, short sell, trade in derivatives, trade in multiple markets, trade at high or low frequency all depending more on the ability, knowledge, resources, and strategy of the manager. There are a wide range of funds with varying specialties and strategies.

Synonyms: Total return fund, long/short fund, managed futures fund, investment company
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