Hedge funds are called funds, which are essentially different from mutual funds in terms of security, income and appreciation. The Fund uses various trading methods (such as short selling, leverage, program trading, swap trading, arbitrage trading, derivative products, etc.). ) to hedge, transpose, hedge, and make huge profits. ?
Hedging is an act or strategy aimed at reducing risks. However, in the evolution of several decades, hedge fund has lost its original connotation of pure risk hedging, and it has become synonymous with a new investment model, that is, an investment model based on the latest investment theory and extremely complicated financial market operation skills, making full use of the leverage of various financial derivatives, taking high risks and pursuing high returns.
What are the characteristics of hedge funds?
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. ?
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. ?
Financing is private: the organizational structure of hedge funds is generally a partnership system. 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. ?
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:
China Economic Net Hedge Fund.