The typical hedging operation is that the fund manager buys a put option with a certain price and term after buying a stock. When the stock price falls below the price limited by the option, the holder of the seller's option can sell his stock at the price limited by the option, thus hedging the risk of stock price decline.
In another hedging operation, the fund manager first chooses a certain kind of bullish industry, buys a few good stocks in this industry and sells a few bad stocks in this industry according to a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will definitely exceed other stocks in the same industry, and the gain from buying high-quality stocks will be greater than the loss from shorting inferior stocks; If the expectation is wrong, the stocks of this industry will fall instead of rising, then the stocks of poor companies will fall much more than those of high-quality stocks, and the profit of short selling will be higher than the loss caused by the decline of buying high-quality stocks. For this reason, the early hedge fund can be said to be a form of fund management based on the conservative investment strategy of hedging.
After decades of evolution, hedge funds have lost the original connotation of risk hedging, and the title of "hedge fund" also exists in name only. Hedge fund has become synonymous with a new investment model, that is, based on the latest investment theory and extremely complex financial market operation skills, making full use of the leverage of various financial derivatives, taking high risks and pursuing high returns. The current hedge funds have the following characteristics: complex investment activities, obvious investment leverage effect, private placement as the main financing method, and hidden and flexible operation.
Quantum Fund is a world-famous large-scale hedge fund and one of the five largest hedge funds run by American financier george soros.
Quantum Fund evolved from Double Eagle Fund. The Double Eagle Fund was founded by Soros and jim rogers on 1969 with a capital of 4 million US dollars. The fund was established in new york, but its investors are all foreign investors who are not American nationals, thus avoiding the supervision of the US Securities and Exchange Commission. 1973, Shuang Ying Fund was renamed Soros Fund with a capital of about120,000 USD. 1979, Soros renamed the company Quantum Company. By the end of 1997, Quantum Fund has become a giant fund with total assets of nearly $6 billion. By the end of 1996, 1 10,000 dollars injected by Quantum Fund had increased to 300 million dollars, an increase of 30,000 times.
The reason why Quantum Fund has become the focus of international financial circles is because Soros launched several large-scale currency sniper wars with this fund in the 1990s. During this period, Quantum Fund, with its abundant financial resources and fierce style, made waves in the international currency market and attacked currencies with weak foundations, which was successful repeatedly.
Although the quantum fund has only $6 billion in assets, it has become a decisive force in the international financial market because it can obtain the investment effect equivalent to tens of billions or even hundreds of billions of funds through leveraged financing and other means when needed. At the same time, due to Soros's fame, the whereabouts and betting direction of Quantum Fund are followed by large-scale international hot money. Soros and his quantum fund were directly responsible for several serious currency crises in this period, such as the pound crisis, the Mexican economic crisis and the financial turmoil in Southeast Asia.
However, since 1998, investment mistakes have caused huge losses to the quantum fund. First, Soros misjudged the Russian debt crisis of 1998 and the trend of the Japanese yen exchange rate, which caused huge losses to the Quantum Fund, and then the online stocks of US stocks invested by the Fund also fell sharply. At this point, the total loss of the Quantum Fund reached nearly 5 billion US dollars, and the loss was huge. On April 28th, 2000, Soros had to announce the closure of its two funds, Quantum Fund and Fixed Fund, and the Quantum Fund died. At the same time, Soros announced that the remaining assets of the fund will be transferred to the newly established "Quantum Endowment Fund" to continue its operation, and claimed that the new fund will change its investment strategy and mainly engage in arbitrage trading with low risk and low return.
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