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Effective URL: https://www.investor.gov/introduction-investing/investing-basics/glossary/hedge-funds
Submission: On August 18 via api from CH — Scanned from DE
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Skip to main content An official website of the United States government Here’s how you know Here’s how you know The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site. The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely. Investor.gov U.S. Securities and Exchange Commission AUXILIARY HEADER * About Us * Contact Us * Follow Us * Información en Español Search Investor.gov Please enter some keywords to search Menu Toggle MAIN NAVIGATION * BACK * Introduction to Investing * BACK * Getting Started * BACK * Five Questions to Ask Before You Invest * Understanding Fees * Asset Allocation * Assessing Your Risk Tolerance * Investing on Your Own * Working with an Investment Professional * Researching Investments * Investing Basics * BACK * Save and Invest * Invest For Your Goals * How Stock Markets Work * Investment Products * What is Risk? * Role of the SEC * Glossary * General Resources * BACK * Investor Alerts & Bulletins * Publications and Research * Useful Websites * Questions? Visit Our Glossary * Financial Tools & Calculators * BACK * Financial Tools * BACK * Investment Professional Background Check * Fund Analyzer * Retirement Ballpark E$timate * Social Security Retirement Estimator * Calculators * BACK * Calculadora de interés compuesto * Compound Interest Calculator * Savings Goal Calculator * Required Minimum Distribution Calculator * College Savings Calculator * Alerts and Bulletins * Protect Your Investments * BACK * Fraud * BACK * Types of Fraud * How to Avoid Fraud * Resources for Victims * Get Help * BACK * Submit Questions and Complaints * Arbitration and Mediation Clinics * Check Out Your Investment Professional * Additional Resources * BACK * Spotlight * BACK * Crypto Assets * Director's Take * Investing Quizzes * Microcap Fraud * Public Service Campaign (new) – “Investomania” * Public Service Campaign (prior videos) * World Investor Week * Retirement Toolkit * BACK * First Job * Switching Jobs * Employer-Sponsored Plans * Federal Government Plans * Individual Retirement Accounts (IRAs) * Managing Lifetime Income * Senior Specialist Designations * Social Security * Avoiding Retirement Fraud * Information For: * BACK * Librarians * Teachers * Military * Veterans * Native Americans * Seniors * Youth * Calculate Compound Interest USER ACCOUNT MENU * Log in BREADCRUMB 1. Home 2. Introduction to Investing 3. Glossary MAIN NAVIGATION (GLOSSARY) * Save and Invest * Define Your Goals * Diversify Your Investments * Figure Out Your Finances * Gauge Your Risk Tolerance * Learn About Investment Options * Pay Off Credit Cards or Other High Interest Debt * Save for a Rainy Day * Small Savings Add Up to Big Money * Understand What It Means to Invest Expand * Invest For Your Goals * How Stock Markets Work * Public Companies * Market Participants * Types of Orders * Types of Brokerage Accounts * Stock Purchases and Sales: Long and Short * Executing an Order Expand * Investment Products * Auction Rate Securities * Bonds or Fixed Income Products * Bonds * Corporate Bonds * High-yield Corporate Bonds * Municipal Bonds * Savings Bonds Expand * Certificates of Deposit (CDs) * Closed End Funds * Interval Funds * Publicly Traded Business Development Companies (BDCs) * Publicly Traded Closed-End Funds Expand * Commodities * Education Savings - 529 Plans * Insurance Products * Annuities * Indexed Annuities * Variable Annuities * Variable Life Products Expand * International Investing * Mutual Funds and Exchange-Traded Funds (ETFs) * Alternative Mutual Funds * Leveraged Loan Funds * Exchange-Traded Funds (ETFs) * Index Funds * Money Market Funds * Mutual Funds * Smart Beta, Quant Funds and other Non- Traditional Index Funds * Target Date Funds Expand * Options or Derivatives * Private Investment Funds * Hedge Funds * Private Equity Funds Expand * Real Estate Investment Trusts (REITs) * Retirement Savings * 401(k) * 403(b) and 457(b) * IRA (Individual Retirement Accounts) Expand * Stocks * Structured Notes with Principal Protection Expand * What is Risk? * Role of the SEC * How to Submit Comments to the SEC * Researching the Federal Securities Laws Through the SEC Website * The Laws That Govern the Securities Industry Expand * Glossary HEDGE FUNDS Like mutual funds, hedge funds pool investors’ money and invest the money in an effort to make a positive return. Hedge funds typically have more flexible investment strategies than mutual funds. Many hedge funds seek to profit in all kinds of markets by using leverage (in other words, borrowing to increase investment exposure as well as risk), short-selling and other speculative investment practices that are not often used by mutual funds. Unlike mutual funds, hedge funds are not subject to some of the regulations that are designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge fund managers may not be required to register or to file reports with the SEC. Hedge funds, however, are subject to the same prohibitions against fraud as are other market participants, and their managers owe a fiduciary duty to the funds that they manage. Hedge fund investors do not receive all of the federal and state law protections that commonly apply to most mutual funds. For example, hedge funds are not required to provide the same level of disclosure as you would receive from mutual funds. Without the disclosure that the securities laws require for most mutual funds, it can be more difficult to fully evaluate the terms of an investment in a hedge fund. It may also be difficult to verify representations you receive from a hedge fund. Learn more FEATURED CONTENT INVESTING QUIZ – AUGUST 2022 Test your knowledge of mutual funds and ETFs! TIPS FOR TEACHERS: INVESTING FOR RETIREMENT Read our Investor Bulletin to learn about 403(b) and 457(b) retirement savings plans and how to make informed decisions when investing for retirement. CRYPTO ASSETS Expand your knowledge about investment opportunities in crypto assets on our spotlight page. TAKING STOCK IN TEEN TRADING It’s never too early to start thinking about saving and investing. Our Director's Take article can help parents and teens learn how to start making sound financial decisions together. SIGN UP FOR INVESTOR UPDATES Sign up for Investor Updates Enter Email Address FOLLOW US * Twitter(link is external) * Facebook(link is external) * YouTube(link is external) SITE INFORMATION * SEC.gov * MyMoney.gov(link is external) * FOIA * Plain Writing * Privacy * Vulnerability Disclosure Policy * USA.gov(link is external) * Disclaimer Return to Top AddThis Sharing Sidebar Share to FacebookFacebook , Number of shares Share to TwitterTwitterShare to EmailEmailShare to PrintPrintMore AddThis Share optionsAddThis , Number of shares22 Hide Show Close AddThis AddThis Sharing SHARESFacebookTwitterEmailPrintAddThis