Hedge Fund Wikipedia, the free encyclopedia Jump to: Navigation, Search Hedge Fund refers to a combination of financial derivatives such as financial futures and financial options and financial organizations

A financial fund that combines high-risk speculation with the purpose of profit.

Contents [Hide] * 1 What is a hedge fund o 1.1 Basic connotation o 1.2 Origin and development * 2 Operation of hedge funds * 3 Famous hedge funds o 3.1 Quantum Fund o 3.2 Tiger Fund * 4 Hedge fund investment cases o 4.1 1992 Sniper

Pound o 4.2 Asian Financial Crisis[edit] What is a hedge fund[edit] Basic connotation People call financial futures and financial options financial derivatives, and they are usually used in financial markets as hedging and risk avoidance

s method.

Over time, in the financial market, some fund organizations use financial derivatives to adopt a variety of investment strategies for profit. These fund organizations are called hedge funds.

At present, hedge funds have long lost the connotation of risk hedging. On the contrary, it is now generally believed that hedge funds are actually based on the latest investment theories and extremely complex financial market operating skills, making full use of the leverage effect of various financial derivatives to bear high risks.

, pursue high-yield investment models.

[edit] Origin and development The English name of hedge fund is Hedge Fund, which means "risk-hedged fund" and originated in the United States in the early 1950s.

The purpose of the operation at that time was to use financial derivatives such as futures and options as well as the operational skills of actual buying and selling of different related stocks and risk hedging to avoid and resolve investment risks to a certain extent.

In 1949, the world's first limited cooperative Jones hedge fund was born.

Although hedge funds appeared in the 1950s, they did not attract much attention in the next three decades. It was not until the 1980s that, with the development of financial liberalization, hedge funds became more popular.

Vast investment opportunities have since entered a stage of rapid development.

In the 1990s, as the threat of world inflation gradually diminished and financial instruments became increasingly mature and diversified, hedge funds entered a stage of vigorous development.

According to statistics from the British "Economist", from 1990 to 2000, more than 3,000 new hedge funds appeared in the United States and the United Kingdom.

After 2002, the rate of return of hedge funds has declined, but the scale of hedge funds is still large. According to a report by the British "Financial Times" on October 22, 2005, so far, the total assets of global hedge funds have reached 11,000

One hundred million U.S. dollars.

[Edit] The operation of hedge funds In the initial hedging operation, after purchasing a stock, the fund manager also purchased a put option (Put Option) with a certain price and expiration date on the stock.

The utility of a put option is that when the stock price falls below the price specified by the option, the holder of the put option can sell the stock he holds at the price specified by the option, thereby hedging the risk of the stock falling in price.

In another type of hedging operation, the fund manager first selects a certain industry with bullish conditions, buys several high-quality stocks in the industry, and at the same time sells several low-quality stocks in the industry at a certain ratio.

The result of such a combination is that if the industry is expected to perform well, high-quality stocks will rise more than other stocks in the same industry, and the income from buying high-quality stocks will be greater than the loss from short-selling low-quality stocks; if the expectations are wrong, stocks in this industry will not rise but fall.

, then the stocks of poor companies must fall more than those of high-quality stocks, and the profits from short selling must be higher than the losses caused by the decline of high-quality stocks.

Because of this operating method, early hedge funds were used as a fund management form for conservative investment strategies for risk hedging and value preservation.

However, as time goes by, people's understanding of the role of financial derivatives has gradually deepened. In recent years, hedge funds have become more popular because of their ability to make money in bear markets.

From 1999 to 2002, general public funds lost an average of 11.7% per year, while hedge funds gained 11.2% per year during the same period.

There is a reason why hedge funds have achieved such impressive results, and the gains they make are not as easy as outsiders understand. Almost all hedge fund managers are excellent financial brokers.