![]() For example, to offset the risk caused by an asset’s seasonal fluctuation, you could invest in an asset with the opposite seasonality. Hedging, which aims to limit risk by offsetting one security’s risk with another.Diversification, which requires building portfolios that contain a variety of asset types and risk profiles as a way to spread out risk and maximize potential returns.Two key hedge fund strategies to know are: The primary goal of hedge funds is to realize a return on investment no matter the market’s state. Hedge funds’ investment strategies can include virtually any investment type, ranging from traditional assets, such as stocks and bonds, to other types of alternatives, like private companies or real estate. Hedge funds are a type of alternative investment that use pooled funds and various investment strategies to earn returns for limited partners. ![]() Whether you’re an aspiring hedge fund manager, an accredited investor looking to get started in the space, or a curious professional hoping to understand hedge fund analysis, gaining a foundation in the basics of hedge funds and the metrics most commonly used to measure their performance is a great place to start.įree E-Book: A Manager's Guide to Finance & AccountingĪccess your free e-book today. Hedge funds use a wide variety of sophisticated strategies, but they don’t have to be confusing. This high-risk, high-reward asset class is a notoriously esoteric investment option limited to high-net-worth individuals and institutional investors. By research firm Preqin, hedge funds surpassed $4 trillion in assets under management at the end of March 2021. ![]()
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