Hedge funds are also called arbitrage funds or hedge funds. Hedge originally refers to the speculative method of using two bets to prevent losses in gambling. Therefore, speculative funds traded in the financial market are called hedge funds.

American hedge funds have developed with the development of American financial industry, especially the emergence of futures and options trading. At present, there are at least 4,200 hedge funds in the United States with a total capital of over $300 billion.

1. Characteristics of hedge funds

The biggest feature of hedge funds is loan speculation, that is, shorting. About 85% hedge funds in the United States speculate on loans. After selecting a suitable market or project, with a small amount of funds as the bottom, make huge loans to commercial banks, investment banks or stock exchanges, and then pour a lot of money into annihilation, or lose or win. Their investment strategy is absolutely confidential. Since 1990s, the risk coefficient of American hedge funds has been increasing, but most of them are successful.

2. Classification of hedge funds

By means of trading, it can be divided into low-risk hedge funds, high-risk hedge funds and crazy hedge funds.

① Low-risk hedge funds. It mainly invests in American and foreign stock markets, and generally rarely uses more than twice its own funds for speculative trading. Trading methods are mainly long-term buying and short-term selling, that is to say, buying stocks that may rise, borrowing and selling stocks that may fall; Buy back these stocks after the market improves;

② High-risk hedge funds. Speculative transactions are often carried out with loans 25 times higher than capital, including long-term buying and short-term selling in global stock markets, as well as large-scale speculative transactions in global markets such as bonds, currencies and commodity futures. A typical example is the quantum fund operated by Soros;

③ Crazy hedge funds. Speculate in the international financial market with loans ten times or even dozens times higher than its own capital. The most typical example of this kind of hedge fund is the American long-term capital management fund, which used to borrow more than $65.438+0 billion from banks with assets of more than $4 billion, and the market value of various securities and stocks it bought and sold was as high as $ 654.38+0.25 trillion, which led to the outbreak of the American hedge fund incident in September, 1998.

3. The difference between hedge funds and * * * funds

In a broad sense, hedge funds are also a kind of mutual funds, but compared with ordinary mutual funds, hedge funds have many unique characteristics:

① Investor qualification. Investors in hedge funds have strict qualifications. The securities law of the United States stipulates participation in the name of an individual, with an income of at least $200,000 in the last two years. If you participate by surname, your husband and wife have earned at least $300,000 in the last two years; In the name of the organization, the net assets are at least $6,543,800+0,000. 1996 made a new regulation: the number of participants was expanded from 100 to 500. The condition of participants is that individuals must own investment securities worth more than $5 million. Generally, there is no such restriction with funds.

② Operation. The operation of hedge funds is unrestricted, and there are few restrictions on investment portfolios and transactions. Major partners and managers can freely and flexibly use various investment technologies, including short selling. Trading and leverage of derivatives. The general * * * fund is more restricted in operation.

3 supervision. Hedge funds are currently unregulated. The Securities Law of the United States 1933, the Securities Exchange Law of 1934 and the Investment Company Law of 1940 all stipulate that institutions with less than 100 investors need not register with the financial authorities such as the Securities and Exchange Commission of the United States when they are established, and can be exempted from regulation. Because investors are mainly a few very sophisticated and wealthy individuals, they have strong self-protection ability. In contrast, the supervision of mutual funds is relatively strict, mainly because investors are the general public and many people lack the necessary understanding of the market. In order to avoid public risks, protect the weak and ensure social security, strict supervision is implemented.

4 financing methods. Hedge funds are generally initiated through private placement, and the securities law stipulates that no media should be used to advertise when attracting customers. Investors mainly participate in four ways: according to the so-called "reliable investment news" obtained by the upper level; Know hedge fund managers directly; Transfer through other funds; Investment bank. Specially introduce securities intermediary companies or investment consulting companies. The general * * * funds mostly entertain customers through public offering and public advertising.

⑤ Whether it can be established offshore. Hedge funds usually set up offshore funds, which has the advantage of avoiding the restrictions on the number of investors and tax avoidance in American law. Usually located in the Virgin Islands, Bahamas, Bermuda, Cayman Islands, Dublin, Luxembourg and other tax havens, these places have little tax revenue. Of the $68 billion hedge funds, $70 million is invested in offshore hedge funds. According to statistics, if "funds of funds" are not included, the assets managed by offshore funds are almost twice that of onshore funds. Ordinary * * * funds cannot be established overseas.