What Is A Hedge Fund?

This is a series of explainers to educate and inform new investors. In association with Dun & Bradstreet India as knowledge partner.

Hedge Fund: Definition, Meaning & Basics

The concept of a "hedge fund" has its origins in an investment strategy, where returns can be generated irrespective of stock market movements while keeping the investment protected from potential loss.

A hedge fund invests in various asset classes using unconventional strategies. It pools money from high net-worth individuals and institutional investors. These funds do not source money from retail investors. Hedge funds are not regulated like some of the conventional funds, such as mutual funds, pension funds, etc.

Hedge funds charge performance as well as fund management fees from their investors. A performance fee is charged once the returns exceed a certain threshold.