Hedge Strategies

Hedge strategy based mutual funds and ETFs pursue investment strategies that are... Hedge strategy based mutual funds and ETFs pursue investment strategies that are distinct from a typical buy and hold portfolio. They may bet against stocks (sell short), use leverage (use borrowed money) to enhance returns, and employ financial derivatives to either make bets or protect an aspect of a portfolio. These funds also may use a variety of specific approaches in managing money, such as market neutral, long-short equity, and merger arbitrage. These are usually actively managed funds and, depending on their mandate, may invest in a broad range of listed and unlisted asset classes. They are usually only available to accredited investors. Some of these funds are riskier than others. For example, a fund that uses a lot of leverage, or takes concentrated short positions, exposes itself to the possibility of significant losses. On the other hand, a typical market neutral fund may actually exhibit less volatility than the overall equity market. Last Updated: 12/03/2024 View more View less

Hedge strategy based mutual funds and ETFs pursue investment strategies that are distinct from a typical buy and hold portfolio. They may bet against stocks (sell short), use leverage (use borrowed money) to... Hedge strategy based mutual funds and ETFs pursue investment strategies that are distinct from a typical buy and hold portfolio. They may bet against stocks (sell short), use leverage (use borrowed money) to enhance returns, and employ financial derivatives to either make bets or protect an aspect of a portfolio. These funds also may use a variety of specific approaches in managing money, such as market neutral, long-short equity, and merger arbitrage. These are usually actively managed funds and, depending on their mandate, may invest in a broad range of listed and unlisted asset classes. They are usually only available to accredited investors. Some of these funds are riskier than others. For example, a fund that uses a lot of leverage, or takes concentrated short positions, exposes itself to the possibility of significant losses. On the other hand, a typical market neutral fund may actually exhibit less volatility than the overall equity market. Last Updated: 12/03/2024 View more View less