Cointelegraph

Hedge Fund News

A hedge fund is an investment pool or fund that is managed by financial professionals, known as fund managers, and trades in a wide range of asset classes in order to generate market-beating returns. Often employing a combination of different trading instruments within an asset class, hedge funds indulge in risky trading and investment strategies, including shorting a market instrument in order to generate a profit. 

While not many hedge fund managers adhere to the principles of hedging when investing in financial markets, the term “hedge fund” is used to describe any investment fund that uses credit or borrowed capital to speculate across various asset classes. Hedge funds that specialize in investing in cryptocurrencies and other decentralized digital assets are known as cryptocurrency hedge funds. Experts or insider investors actively manage funds for a fee to analyze and choose investment opportunities.

Falling out of the purview of central agencies that monitor financial markets in their respective jurisdictions, hedge funds are usually incorporated overseas as a limited liability partnership (LLP) and rely on the reputation of their fund managers to draw investors. Despite the potential to generate greater returns, investments in hedge funds do not enjoy the same liquidity as those made in mutual funds, with higher management fees further denting their overall appeal to the average investor.