It is a form of investment fund, which means "risk offset fund". Hedge funds use various trading methods to hedge, transpose, hedge and hedge, and make huge profits. These concepts have gone beyond the scope of traditional risk prevention and income guarantee. In addition, the legal threshold for initiating and establishing hedge funds is much lower than that of mutual funds, which further increases the risk.
Broadly speaking, in the financial market, some fund organizations use financial derivatives to adopt various investment strategies to make profits. These fund organizations are called hedge funds, not literally "funds with hedging strategies".
Now 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, making full use of the leverage of various financial derivatives, taking high risks and pursuing high returns, and actually represent a financial asset.
Characteristics of hedge funds
Hedge funds generally have the following four characteristics: high leverage of investment effect, complexity of investment activities, private placement of financing methods, concealment and flexibility of operation.
1. High leverage
Typical hedge funds often use bank credit to increase their investment funds by 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 the securities assets of hedge funds makes it convenient for hedge funds to make mortgage loans. The existence of leverage also makes hedge funds a high-risk and high-return investment model.
2. Complexity
With the increasing complexity of the structure and the continuous renovation of the model, various financial derivatives such as futures, options and swaps 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. Hedge funds match these financial instruments with complex portfolio design, invest according to market forecasts, and obtain excess profits under accurate forecasts, or use unbalanced investment strategies caused by short-term midfield fluctuations to obtain the price difference when the market returns to normal.
3. Direct sales when issuing bonds
Hedge funds are mostly private, and the organizational structure 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. Because hedge funds require high concealment and flexibility in operation, investors are generally large fund holders, and the number of investors will be controlled within a certain range (generally not more than 65,438+000 in the United States and not more than 50 in Japan).
4. Concealment and flexibility
Hedge funds are different from ordinary investors' securities investment funds not only in terms of fund investors, fund raising methods, information disclosure requirements, and supervision degree. There are also many differences in the fairness and flexibility of investment activities. Investment funds generally have a clear definition of portfolio. In other words, there are definite plans on the choice and proportion of investment tools, such as balanced funds, which means that stocks and bonds account for about half of the fund portfolio, and growth funds is dominated by high-growth stocks; At the same time, mutual funds are not allowed to use credit funds for investment, while hedge funds have no restrictions and definitions in these aspects. They 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. Hedge funds play an important role in the speculative activities in the modern international financial market because of the high concealment and flexibility of operation and the leverage financing effect.
The Development of Hedge Funds in China
With the diversification and internationalization of China's financial and capital markets, more and more overseas hedge funds began to pay attention to China. At this important stage of the vigorous development and perfection of domestic hedge funds, overseas hedge funds with rich experience in international capital are also eyeing the cake of China. Many overseas hedge funds or people who have experience in hedge fund management and investment abroad are ready to try or have settled in China to seek opportunities for development and cooperation.
Overseas hedge funds value the development of China. In fact, it is nothing more than three reasons:
First, the gradual internationalization of RMB and the gradual opening-up of cross-border RMB assets will provide a large number of opportunities for domestic asset managers or investors to go abroad, and also provide a large number of overseas institutional investors and high-net-worth customers with opportunities to enter the China market.
Second, China's regulatory authorities and fund industry are becoming more and more open to hedge funds, and the fund law is constantly being revised and improved, which makes the secondary market in which hedge funds participate more liquid, so that hedge funds can really develop.
Third, the appreciation of China's wealth. The bank's high-net-worth customers manage 17 trillion yuan, while Public Offering of Fund only manages 2 trillion yuan and Sunshine Private Equity only manages 250 billion yuan. In the future, China people's wealth will flow to more effective and actively managed investment fields.
This article comes from the capital state.
Related Q&A: The characteristic of hedge funds is (). Hedge fund, ABCD hedge fund, has four characteristics: high leverage of investment effect, complexity of investment activities, private placement of financing methods, concealment and flexibility of operation.