This paper presents an aggregated picture of hedge funds industry activity, illustrating key trends and risks. A hedge fund is an alternative investment vehicle available only to sophisticated investors, such as institutions and individuals with significant assets. Alternative investment strategies used to be synonymous with hedge funds and the endowments and wealthy investors that bought into them. Given the unpredictability of today's financial markets, many investors are looking to reduce the impact of market volatility on their portfolios. Hedge fund strategies may help by offering additional diversification, new sources of return and the potential for reduced risk. Hedge funds are structured as limited partnerships, LLCs or offshore investment companies. Hedge funds are not subject to some of the regulations that are designed to protect investors.


Key words

hedge fund, sophisticated investors, investment structure, alternative investment strategies.


JEL Codes: G11



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