are pooled investment vehicles that are privately managed and administered
by professional investment managers for investors who have experience of
alternative, unregulated investments. This investment vehicle is not
generally considered suitable for private investors. It is different from
another pooled investment fund, the unit trust fund, in that hedge funds are
able to sell securities short and buy securities on leverage, which is
consistent with their typically short-term and high-risk oriented investment
Many, but not all, hedge fund strategies tend to hedge against downturns in the markets being traded. Hedge funds are flexible in their investment options (can use short selling, leverage, derivatives such as puts, calls, options, futures, etc.).
acknowledged hedge fund was launched in 1949, although leverage and short
selling had been used long before this time, but not combined in a low risk
hedged model. The original model of long/short equities in the same sector
has evolved into a multitude of strategies. In the US, hedge funds have been
accepted as an asset class for many years and can be found in the portfolios
of pension funds, endowments and other conservative investors.