Quick Definition

A hedge fund is a pooled investment fund that employs different strategies to earn active returns for its investors, often using complex portfolios including derivatives and leverage.

Examples

• 1A hedge fund might invest in distressed securities to capitalize on potential high returns from companies that are undervalued or in financial distress.
• 2Hedge funds often engage in short selling, betting against stocks they expect to decline in value to profit from the fall.
• 3Some hedge funds focus on macroeconomic strategies, investing based on predicted movements in global markets due to economic indicators or political events.

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