Hedge Fund Characteristics

Abstract

In Chapter 1, we introduced the concept of hedge fund. We described their evolution over time and geographically before analysing their future development and the big names in the industry. In this second chapter, we focus on the characteristics of hedge funds — including investment strategies, fund structure, risks, investors and the fee structure — that will enable us to identify and individualize every single one of them. Then we describe specific asset management techniques such as short selling and leverage, before presenting some global statistics of the industry. We will devote a section to the link between hedge funds and other alternative products before presenting the strengths and weaknesses of hedge funds. We end this chapter with a comparison between hedge funds and managed accounts, the presentation of hedge fund replication and the introduction of the structures available to gain exposure to such strategies.