hedge fund

noun

Definition of hedge fund

: an investing group usually in the form of a limited partnership that employs speculative techniques in the hope of obtaining large capital gains

Examples of hedge fund in a Sentence

Recent Examples on the Web

Politico reported earlier this year that Hunter and James Biden sometimes tried to leverage Joe Biden's political ties to attract investors for a hedge fund. — Bill Barrow, USA TODAY, "Biden pledges 'absolute wall' between job, family business after scrutiny of son, brother," 29 Aug. 2019 Separately, a hedge fund Social Capital opened in 2016 that invested in public companies has since been wound down, two people familiar with the matter said. — Miles Kruppa, latimes.com, "With Virgin Galactic deal, a former Facebook star is back in the spotlight," 12 July 2019 In 1998, the Fed cut was driven by the collapse of hedge fund Long-Term Capital Management after Russia’s debt default. — James Mackintosh, WSJ, "If the Fed Cuts, History Provides Guide to Market Impact," 13 June 2019 On Friday, Barnes & Noble announced it was being acquired by hedge fund Elliott Management for $476 million and will be taken private. — Washington Post, "Hudson’s Bay executive leads bid to take retailer private," 10 June 2019 Nor do scientists know whether the entire population of a microbe will opt for dormancy or if some might become dormant as a hedge fund for their brethren that try to make a go of it, even in adverse circumstances. — Carrie Arnold, WIRED, "A Blazing Hot Coal Seam Shows How Microbes Can Spring to Life," 21 Apr. 2019 Epstein had at one time been an investor in a hedge fund managed by those executives. — Jane Coaston, Vox, "Jeffrey Epstein, the convicted sex offender who is friends with Donald Trump and Bill Clinton, explained," 22 Feb. 2019 Tepper, 60, is the founder and CEO of global hedge fund Appaloosa Management, and has a net worth of over $11 billion according to a 2017 Forbes assessment. — Jourdan Rodrigue, charlotteobserver, "Sale of Panthers to David Tepper finalized. Here's what we know, and what's next," 9 July 2018 The firm worked for a hedge fund that was locked in a legal fight against Eco-Bat, a lead-production company represented by Brewer’s firm. — Mike Spies, The New Yorker, "New Documents Raise Ethical and Billing Concerns About the N.R.A.’s Outside Counsel," 30 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'hedge fund.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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More Definitions for hedge fund

hedge fund

noun

Financial Definition of hedge fund

What It Is

A hedge fund is an investment structure designed to allow management of a private, unregistered portfolio of assets.

How It Works

The original concept of a hedge fund was to offer plays against the market using short selling, futures, and derivatives. Today, hedge funds follow any number of strategies and cannot be considered a homogenous asset class.

Hedge funds (as an asset class) use various strategies, including leverage, hedging, and macroeconomic bets on commodities, currencies, and interest rates. The common denominator of hedge funds is not their investment strategy but their search for absolute returns (as opposed to relative returns). Absolute return strategies focus on generating a positive return on investment (ROI) regardless of the direction of the financial markets.

Hedge fund managers seek freedom to achieve high absolute returns and wish to be rewarded for their performance. The compensation arrangement for the manager typically specifies considerable profit participation. The specific legal organization of hedge funds and the considerable fee structure expected by fund managers are probably the only uniform characteristics of hedge funds.

Only accredited investors are eligible to invest in hedge funds. The term accredited investor includes wealthy individuals and organizations like corporations, endowments, or pension funds. Accredited investors invest in hedge funds because they are looking for investments with negative correlation to the broad market.

Why It Matters

Because they operate outside the realm of the public markets and are lightly regulated, hedge funds have been declared "off limits" to most individual investors. Some say the lack of oversight paired with the high-risk, high-return strategies employed by most hedge funds have resulted in some of the world's most catastrophic financial events, including the failure of Long-Term Capital Management in 1998 and the collapse of two Bear Stearns hedge funds in 2007.

That being said, all investors, regardless of experience and sophistication, need to perform extensive due diligence before investing in any hedge fund. Before investing in a hedge fund, an investor needs to consider the correlation of the fund strategy to the rest of the investor’s portfolio, the reputation and success rate of the fund manager, the use of leverage, as well as the fee schedule.

Source: Investing Answers

hedge fund

noun

English Language Learners Definition of hedge fund

finance : a group of investors who take financial risks together in order to try to earn a lot of money

See the full definition for hedge fund in the English Language Learners Dictionary

hedge fund

Legal Definition of hedge fund

see fund sense 2

hedge fund

Definition of hedge fund

Examples of hedge fund in a Sentence

First Known Use of hedge fund

Financial Definition of hedge fund

English Language Learners Definition of hedge fund

Legal Definition of hedge fund

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