what is a hedge fund? 

a jargon-free guide 

If you’re confused about the question “what is a hedge fund?” you are not alone. Part of their allure is their exclusivity and secrecy.

A hedge fund is a partnership between a professional fund manager and investors. The manager and investors pool money into a fund, using different strategies to grow it.

What Is A Hedge Fund?

While there are hundreds of strategies employed by hedge funds, most can be grouped into these main categories:

Hedge Fund Strategies

An event-driven hedge fund strategy seeks to identify risks and opportunities in specific events and make trades that pay off if those risks or opportunities are realized.

Event-Driven Strategy

Investopedia defines arbitrage as “the simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset’s listed price.

Relative Value