Hedge fund
Some believe that hedge funds can provide effective protection against volatility in the stock market, and even duplicate the functions of mutual funds, working with bonds. On this subject there was no scientific work and practice have argued that hedge funds behave differently than mutual funds. In fact, very few people got out of the activities of hedge funds, so the majority was not able to check how it differs from the return of mutual funds. People are surprised when they learn that the activities of hedge funds are so different. This is still a relatively new area in which can work all sorts of things.
The main thing is that, firstly, hedge funds operate completely independently of other investment mechanisms such as, for example, mutual funds, and so they can provide an opportunity for portfolio diversification. Secondly, hedge funds can also be very different from each other. Hedge-fund managers use many different styles of investment behavior, and different styles, of course, work with the greatest efficiency for the various portfolios, whose structure is determined by the priorities of the institutional investor.
The main thing is that, firstly, hedge funds operate completely independently of other investment mechanisms such as, for example, mutual funds, and so they can provide an opportunity for portfolio diversification. Secondly, hedge funds can also be very different from each other. Hedge-fund managers use many different styles of investment behavior, and different styles, of course, work with the greatest efficiency for the various portfolios, whose structure is determined by the priorities of the institutional investor.
The vast majority of American mutual funds are tied to two classes of assets: U.S. stocks and U.S. government bonds. Style mutual funds, in general, is reduced to the strategy: buy and hold. Income hedge funds are much more dependent on how the manager makes a trade, and of what type of securities, he (or she) uses.Hedge-fund managers have greater flexibility in choosing among the set of asset classes and the use of dynamic trading strategies that allow them to use short selling, trading in credit and derivatives.
