1. Hedge fund is a form of investment fund, which means "risk to hedge fund". Hedge funds use various trading methods to hedge, transpose, hedge and hedge to make huge profits. These concepts have gone beyond the traditional operation scope of preventing risks and ensuring benefits. In addition, the legal threshold for launching and establishing hedge funds is much lower than that of mutual funds, which further increases their risks.
2. In order to protect investors, the securities management agencies in North America classified it as a high-risk investment category, and strictly restricted the involvement of ordinary investors. For example, it is stipulated that each hedge fund should have fewer than 65,438+000 investors, and the minimum investment is 654,380+000 million dollars. People call financial futures and financial options financial derivatives, and they are usually used as a means to hedge and avoid risks in financial markets.
3. Over time, in the financial market, some funds use financial derivatives to adopt various profit-oriented investment strategies. These funds are called hedge funds. Hedge funds have long lost the connotation of risk hedging. On the contrary, it is generally believed that hedge funds are actually based on the latest investment theory and extremely complicated financial market operation skills, and make full use of the leverage of various financial derivatives to undertake high-risk and high-yield investment models.
Extended data:
What are the characteristics of hedge funds?
1. Complex investment activities: various financial derivatives such as futures and options have gradually become the main operating tools of hedge funds. These derivatives were originally designed to hedge risks, but because of their low cost, high risk and high return, they have become effective tools for many modern hedge funds to speculate. ?
2. The investment effect is highly leveraged: typical hedge funds often use bank credit to expand their investment funds several times or even dozens of times on the basis of their original funds with extremely high leverage, so as to maximize their returns. The high liquidity of securities assets of hedge funds makes it convenient for hedge funds to use fund assets for mortgage loans. ?
3. The financing method is private: the organizational structure of hedge funds is generally partnership. Fund investors buy shares with funds, provide most of the funds, but do not participate in investment activities; Fund managers join in with funds and skills, and are responsible for the investment decisions of funds. Due to the high risk and complex investment mechanism of hedge funds, many western countries prohibit them from publicly recruiting funds to protect the interests of ordinary investors. ?
4. The operation is secret and flexible: Hedge funds can use all operational financial instruments and combinations to maximize the use of credit funds in order to obtain excess returns higher than the average market profit. ?
References:
Hedge Fund-Baidu Encyclopedia