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Friday November 16 2018
 
Facts About the Hedge Fund Industry
  What is a Hedge Fund?
  Key Characteristics of Hedge Funds
  Facts About the Hedge Fund Industry
  Hedging Strategies
  Popular Misconception
  Benefits of Hedge Funds
  Hedge Fund Styles
  What is a Fund of Hedge Funds?
  Synopsis of Hedge Fund Strategies
  Facts About the Hedge Fund Industry
  Hedge vs Mutual Funds

Facts About the Hedge Fund Industry

  • Estimated to be a $1.2 trillion industry with approximately 9,000 active hedge funds and funds of funds.
  • Includes a variety of investment strategies, some of which use leverage and derivatives while others are more conservative and employ little or no leverage. Many hedge fund strategies seek to reduce market risk specifically by shorting equities or through the use of derivatives.
  • Most hedge funds are highly specialized, relying on the specific expertise of the manager or management team.
  • Performance of many hedge fund strategies, particularly relative value strategies, is not dependent on the direction of the bond or equity markets, unlike conventional equity or mutual funds (unit trusts), which are generally 100% exposed to market risk.
  • Many hedge fund strategies, particularly arbitrage strategies, are limited as to how much capital they can successfully employ before returns diminish. As a result, many successful hedge fund managers limit the amount of capital they will accept.
  • Hedge fund managers are generally highly professional, disciplined and diligent.
  • Their returns over a sustained period of time have outperformed standard equity and bond indexes with less volatility and less risk of loss than equities.
  • Beyond the averages, there are some truly outstanding, and some very poor, performers.
  • Investing in hedge funds tends to be favored by more sophisticated investors, including many pension funds, endowments, private banks and high net worth families and individuals, that have lived through, and understand the consequences of, major stock market corrections.
  • Over the past decade an increasing number of endowments and pension funds have allocated assets to hedge funds. 

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