hedge fund
hedge fund see fund 2

Merriam-Webster’s Dictionary of Law. . 1996.

hedge fund
n.
A mutual fund or partnership of investors that uses hedging techniques such as arbitrage, futures contracts, and selling short in an attempt to maximize profits.

The Essential Law Dictionary. — Sphinx Publishing, An imprint of Sourcebooks, Inc. . 2008.


hedge fund
USA
Type of private investment fund that charges performance fees. Hedge funds are only open to a limited number of qualified accredited investors, leverage and short selling strategies. The name derives from their strategy to hedge their investments, though not all hedge funds actually do so today.
Hedge funds are similar to private equity funds in that both are lightly regulated, private pools of capital that invest in securities and compensate their managers with a share of the fund's profits. Most hedge funds invest in relatively liquid assets so they can permit their investors to withdraw their money from the fund frequently (often requiring some months notice). Private equity funds invest primarily in very illiquid assets such as newly formed companies and their investors are "locked in" for the entire term of the fund.
Usually the hedge fund manager will receive both a management fee and a performance (or incentive) fee intended to motivate the investment manager to produce the largest returns they can. A typical hedge fund fee is "2 and 20", meaning management fees of 2% and performance fees of 20%.
Hedge funds are typical investors in bank term loans and second lien loans.
Related terms

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

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  • Hedge fund — A hedge fund is a private investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment funds and which pays a performance fee to its investment manager.… …   Wikipedia

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  • Hedge fund — A fund that may employ a variety of techniques to enhance returns, such as both buying and shorting stocks based on a valuation model. The New York Times Financial Glossary * * * hedge fund hedge fund ➔ fund1 * * *    A private investment fund… …   Financial and business terms

  • hedge fund — noun a flexible investment company for a small number of large investors (usually the minimum investment is $1 million); can use high risk techniques (not allowed for mutual funds) such as short selling and heavy leveraging • Syn: ↑hedgefund •… …   Useful english dictionary

  • Hedge Fund — An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an… …   Investment dictionary

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