A type of managed fund. These investments seek to maximise returns by using a number of
sophisticated, complex investment strategies not found with traditional managed funds. Sometimes
referred to as absolute return funds or alternative assets.
Nowadays it isn’t accurate to assume that hedge funds all try to hedge their risk. In fact,
because hedge fund managers can make speculative investments, these funds can carry more risk
than the overall market. Some hedge funds can also have liquidity restrictions making it difficult for
investors to withdraw their capital before a certain time frame.
Not all hedge funds are the same – investment returns, volatility and risk vary enormously between funds.