1. Because the same fund generally stipulates that short selling is not allowed, the purpose of hedge funds is to hedge the risk of market decline by shorting. However, today, the operation mode of hedge funds is quite different from its original intention. On the contrary, it is aimed at maximizing income, and most of them use short selling to trade with derivative financial products to increase rather than reduce risks.

The risks of hedge funds include leverage risk, short selling risk, high risk preference, lack of transparency, lack of supervision and risks brought by option fluctuation.

2. The early hedge fund can be said to be a form of fund management based on the conservative investment strategy of hedging. However, after decades of evolution, hedge funds have lost the original connotation of risk hedging, and the title of hedge funds 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.

3. Hedge funds are often called "long/short stock hedging", pointing out that hedge funds emphasize short selling and short selling investment strategies, and each hedge fund will adopt a unique strategy suitable for its own situation. Its investment targets include stocks, bonds and commodities, especially high-yield derivative financial products and differentiated debts.