Investing term
What is Hedge?
An asset held specifically because it tends to rise (or at least not fall) when something else in the portfolio falls.
A hedge is an asset held specifically because it tends to hold steady or rise when something else in your portfolio falls — a deliberate offset to a particular risk. Hedges usually cost something in normal times (lower returns, or a premium paid), which is the price of insurance. The goal isn't extra profit; it's softening the blow when things go wrong.
For example
Some investors hold a little gold as a hedge — it may climb in a crisis just as their stocks are falling, cushioning the overall loss.
Hedge is taught hands-on in Stage 17 — Portfolio-Level Risk.
See the lesson →