Hedge Fund
A privately offered pooled vehicle whose strategy, liquidity, fees, valuation, leverage, and investor protections vary materially.
A hedge fund is a privately offered pooled investment vehicle managed under fund-specific documents and regulatory exemptions. Strategies may include long-short, macro, event-driven, relative-value, credit, quantitative, derivatives, or concentrated positions, but not every fund hedges market risk.
Frequently Asked Questions
Do hedge funds always charge “2 and 20”?
No. Management and incentive fees vary, and terms may include hurdles, high-water marks, crystallization schedules, founder classes, pass-through expenses, rebates, or negotiated arrangements.
Can only accredited investors invest in hedge funds?
Eligibility depends on jurisdiction, offering exemption, investor category, fund structure, and current law. Thresholds and definitions can change, and some products use different regulatory wrappers.
Do hedge funds outperform public indexes?
No general conclusion applies. Comparisons depend on strategy, benchmark, risk, leverage, fees, survivorship, backfill bias, liquidity, valuation smoothing, and the selected period.
What liquidity risks do hedge funds have?
Lock-ups, notice periods, gates, side pockets, suspended redemptions, illiquid holdings, valuation uncertainty, and counterparty events can delay or reduce access to capital.