Investing term

What is Hedge fund?

A loosely regulated investment fund that uses leverage, shorting, and complex strategies to seek returns uncorrelated with the broader market.

A hedge fund is a lightly regulated, private investment fund open mainly to wealthy and institutional investors, using tools ordinary funds can't — leverage, short-selling, derivatives — to chase returns that don't track the broad market. They charge high fees and, as a group, have struggled to justify them; access is restricted and results are wildly uneven.

For example

A hedge fund might short overvalued stocks while buying cheap ones, aiming to profit whether the market rises or falls — for a hefty fee.

Hedge fund is taught hands-on in Stage 19 — Beyond Stocks.

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Related terms

ASMLDutch semiconductor-equipment company that makes the EUV lithography machines every advanced chip is manufactured on — a global monopoly with no US peer.Bond ladderA portfolio of bonds with staggered maturities — one matures every year (or every few years) so cash continuously becomes available.CryptocurrencyDigital assets recorded on a blockchain — Bitcoin, Ethereum, etc. Highly volatile and not backed by cash flows or governments.Currency hedgingAn overlay used by some international ETFs to remove the effect of currency moves, so you get the foreign stock return in your home currency.
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