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Hedge funds Essay Topics & Paper Examples

Hedge funds

In order to better understand how hedge funds played a role in the recent crisis affecting the financial market, it is important to first understand how hedge funds work. Hedge funds are similar to mutual funds in that money is pooled from investors and then invested in selected financial instruments in order to gain a positive return. Hedge funds however are not monitored by the Securities and Exchange Commission since the securities they issue are considered as private offerings. In order to get the maximum return for their investors, hedge funds often employ strategies like investing in ventures that have high risk. One way of doing this is through derivatives. Derivatives are financial instruments that gets if values from the…