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Home > QFINANCE Dictionary > Definition of hedge fund

Finance and Business Dictionary

Definition of "hedge fund"

Stockholding & Investments

risky type of investment fund an investment fund that takes considerable risks, including investment in unconventional instruments, in the hope of generating great profits. There are many types of hedge funds, using very different strategies. Some are highly geared and some use arbitrage, futures, and options to achieve their objectives.

Recommended Further Reading (Term count)

  • Fund of Hedge Funds: Understanding the Risks and Returns
    This checklist outlines the ways in which funds of hedge funds operate, and their risks and returns.
  • A Demon of Our Own Design
    Richard Bookstaber (2007)
    A timely book on the risks underpinning the hedge fund industry, and the markets in general. Bookstaber was involved in the design of some of the complex options and derivatives described in the book, which are contributing to the market downturn. Discusses why, although there is greater market sophistication, improved technology, and improved oversight and regulation, the markets are becoming more risky all the time.
  • United States of America
  • Inventing Money: The Story of Long-Term Capital Management and the Legends Behind It
    Nicholas Dunbar (2000)
    Tells the story of the unfolding drama and high-profile collapse of one of the biggest hedge funds in the world. Gives insight into the arcane workings of the hedge fund industry and its biggest players, including Nobel Prize winners. Looks at the opportunities and risks of derivatives, and their use by LTCM.

Definitions of ’hedge fund’ and meaning of ’hedge fund’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’hedge fund’ and other financial terms with our online QFINANCE Financial Dictionary.

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