1. What does fund hedging mean?
Fund hedging, also known as hedge fund, refers to a financial fund that combines financial derivatives such as financial futures and financial options with financial instruments for profit. As a form of investment fund, hedge fund uses various trading methods to hedge and earn huge profits.
To put it simply, hedge funds are operating behaviors that earn more expected returns or avoid more risks through various trading means and trading tools.
2. Are hedge funds risky?
First of all, we must understand that investment and risk are synchronized, and the higher the income, the greater the risk; Hedge fund is an investment method with excess returns, so it involves greater risks.
3. Where does the risk of hedge funds come from?
1) market risk
For hedge funds, market risk is the main source of risk. Investors arbitrage through various financial instruments, in addition to the high risks of financial instruments, there are also trading risks. If the prediction is wrong, there will be losses.
2) Regulatory risks
Hedge funds have high flexibility, too many kinds of trading tools and imperfect market supervision, which will cause regulatory risks.
3) Policy risk
This part of the risk is due to government intervention, which may have an impact on the expected return of fund hedging.
This is the meaning of fund hedging and the risk of hedge funds. I hope it helps you. Warm reminder, financial management is risky and investment needs to be cautious.