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Investing & the Stock Market vocabulary · Funds & ETFs

Hedge fund

Meaning in investing & the stock market, with examples

/ˈhedʒ fʌnd/nounCommon term

In investing & the stock market, hedge fund means: A privately managed investment fund for wealthy or professional investors that can use flexible strategies such as short selling, leverage and derivatives.

In Turkish: serbest fon, hedge fon, serbest yatırım fonu

How it is used

Hedge funds face fewer rules than ordinary funds and usually charge a management fee plus a performance fee. News reports mention hedge funds betting against a stock or a currency. Strategies include long/short equity, macro and arbitrage.

Example sentences

  1. Several hedge funds built large short positions in the retailer before its results.

  2. Only qualified investors can invest in this hedge fund.

Common collocations

  • hedge fund manager
  • macro hedge fund
  • hedge fund strategy
  • performance fee
  • mutual fundA fund that collects money from many investors and uses it to buy a mix of shares, bonds or other assets, managed by professionals and priced once a day.
  • short sellingSelling borrowed shares in the hope of buying them back later at a lower price and returning them, so that the seller profits from a fall in price.
  • leverageThe use of borrowed money or financial products to control a larger investment than your own money would allow, which increases both possible gains and losses.
  • hedgeTo reduce the risk of losing money on an investment or business exposure by taking an opposite position, often with derivatives such as futures or options.
  • derivativeA financial contract whose value depends on the price of something else, such as a share, an index, a currency, an interest rate or a commodity.

More terms: Funds & ETFs

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This page explains English vocabulary for learners. It is not financial advice.