The hedge fund industry developed in the 1950s to become a significant part of financial markets today. Hedge funds differ to more traditional funds in their use of leverage as well as their ability to short sell. They tend to charge both a management fee as a percentage of assets under management and a performance fee which is a percentage of profits. They operate a variety of strategies which focus on everything from big picture macroeconomic themes to relative value and arbitrage strategies.
Key learning objectives:
What defines a hedge fund?
How did hedge funds develop?
What strategies do hedge funds use?