You can name many aliases of hedge funds, such as hedge funds, arbitrage funds and hedge funds, but it is not easy to say what hedge funds are. A variety of large-scale financial reference books have been published in China since 1990s, such as Dictionary of New International Finance (edited by Liu Hongru, 1994) and Encyclopedia of International Finance (edited by Wang Chuanlun). , 1993), has been selected as hedging, fund and arbitrage. But there is no "hedge fund" entry, which shows that until the mid-1990 s, although some related terms of hedge fund have entered, hedge fund is still unheard of. Foreign understanding of hedge funds is also quite confusing. Try to list some definitions of hedge funds in the latest research literature as follows. The IMF's definition is that "hedge funds are private investment portfolios, usually set up offshore to make full use of the benefits of taxation and supervision". Mar/Hedge, the first institution in the United States to provide hedge fund business data, is defined as "collecting incentive commission (usually accounting for 15-25%) and meeting at least one of the following criteria: the fund invests in multiple assets; Only long-term funds must use leverage effect; Or the fund uses various arbitrage techniques in its portfolio. " HFR, another hedge fund research institution in the United States, summed up hedge funds as follows: "Take the form of private investment partnership or offshore fund, extract commissions according to performance, and use different investment strategies." VHFA, a famous American pioneer hedge fund international consulting company, is defined as "taking the form of private partnership or limited liability company, mainly investing in publicly issued securities or financial derivatives." Federal Reserve Chairman Ben alan greenspan gave an indirect definition of hedge fund when he testified about Long Term Capital Management Company (LTCM) in the US Congress. He said that LTCM is a hedge fund, or a mutual fund, which circumvents supervision by limiting its customers to a few very sophisticated and wealthy individuals and pursues high returns under the investment and trading of a large number of financial instruments. According to the above definition, especially Greenspan's indirect definition, we believe that hedge funds are not "whispers", but are essentially a kind of * * * mutual fund, with special organizational arrangements and few investors (including private individuals and institutions). For example, it is like a "rich investment club". Compared with ordinary mutual funds, it is a "public investment club". Due to the special organizational arrangements of hedge funds, they can use existing laws and all financial instruments to obtain high returns without supervision and restraint, which leads to many differences from ordinary funds. Some people think that the key of hedge funds is to use leverage to invest in derivatives. But in fact, as pointed out by the IMF, other investors also participate in exactly the same operations of hedge funds, such as holding positions in the proprietary business departments of commercial banks and investment banks, buying and selling derivatives, and changing asset portfolios in the same way as hedge funds. Many mutual funds, pension funds, insurance companies and universities donate money to participate in some of the same operations and rank among the most important investors in hedge funds. In addition, in the subdivided banking system, the total assets and liabilities of commercial banks are several times their capital. In this sense, commercial banks are also using leverage. Through the interpretation of the literature, try to make the following comparison between hedge funds and ordinary * * * funds (table 1), from which we can clearly see the characteristics of hedge funds, and then accurately grasp what hedge funds are. Reported on May 6, 2006