| Many people within the business industry would | | | | regulations that govern short selling, leverage, |
| have thought about making better use of their | | | | derivatives, fee structures and liquidity of |
| money and have come up with ideas of the | | | | interests on the funds. Hedge funds can see |
| future of their money. A good businessman would | | | | many of these investors return a net asset value |
| spend much of their time researching and | | | | into billions of pounds. This investment is certainly |
| studying the financial market, as well as work on | | | | the top most sought after investment |
| developing their business management skills. A | | | | opportunity, dominating most specialty market like |
| relatively new businessman will come across | | | | trading within derivatives and debt. |
| terminology and phrases that are both unfamiliar | | | | The first recorded hedge fund investment was |
| and confusing, making it vital that they take some | | | | created in 1949 by Alfred W Jones, whose |
| time out researching. | | | | background lay in financial journalism. His belief lay |
| An important investment move that business | | | | in the theory that with individual assets where |
| people will hear of is hedge funds. This is an | | | | there is a price movement is similar component |
| investment fund for a limited range of investors | | | | due to the market overall and due to the |
| made eligible by a range of regulators who | | | | performance of that asset. He put his theory to |
| undertake a wider range of investment and | | | | the test and expanded on his portfolio buying |
| trading ventures. A hedge fund has its own | | | | assets that would accrue stronger prices and |
| investment strategy which helps to identify the | | | | short selling assets that would have weaker |
| type of investments and methods used for the | | | | prices. The end result was that the price |
| investment. This kind of investment uses shares, | | | | movements would be cancelled out in that the |
| commodities and debt, and keeps some of the | | | | loss on shares that have been short sold would |
| risks inherent in these kinds of investment at bay | | | | be cancelled out by the extra gains made on the |
| through short selling and derivatives. | | | | assets that had stronger prices. |
| The reason why hedge funds are only offered to | | | | Hedge funding was coined from the idea of |
| a limited range of professionals and investors is | | | | hedging the risks involved in this kind of |
| because of their previous investing portfolio and | | | | investment and allows for the investment |
| income. The opportunity for hedge fund | | | | manager the freedom to decide upon the |
| investment provides them with exemptions in | | | | investments on a purely commercial basis. |