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Essay / Research Paper Abstract
This 6 page paper looks at hedging funds. The fist part of the paper discusses the role and problems associated with hedge funds, the second part of the paper considers the regulation of the market. The bibliography cites 5 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEhedgef.rtf
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Unformatted sample text from the term paper:
are not generally available to the investing public through the traditional investment channels. Due to there difference in terms of the role, function and associated problems, hedge funds may be
seen as very different from usual investment funds. The first issue with a hedge fund is that there is no single tight definition. In general terms they are funds
that are not limited to the same types of investment seen in retail funds, such as equities and bonds, they are generally funds which use hedging instruments such as swaps,
futures, options and other forms of derivatives as a part of their investment stratagem. Indeed, the definition giving to hedge funds by Stefanini, (2005), is "investment funds that employ hedging
techniques". However, he also argues that this can be misleading and goes on to state "A hedge fund is an investment that provides different risk/returns profiles compared to traditional stock
and bond investments" (Stefanini, 2006). Retail investment funds that are sold to the general public are highly regulated and there are clear
restraints on the level of borrowing that a fund can undertake or the way in which the investment managers can hedge or leverage the fund, while this may occur, it
is severely limited. These restrictions are not in place with a hedge fund, the only restrictions are those laid down in the contract that governs each individual fund. This means
that there is both a wide range of investments and less regulation governing the hedge funds. The funds are often set up as limited partnerships, with the partners either
being institutions that want to invest, or high net worth investors. Despite the argument that the underlying assets may be risky, the role of the funds is mixed. The role
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