noun
General Slang
Hedge fund
· noun · finance
Pooled investment fund that uses leverage, shorting, and exotic strategies to chase absolute returns.
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Definitions
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A private pooled investment vehicle for wealthy clients and institutions. Unlike mutual funds, hedge funds can short stocks, use heavy leverage, trade derivatives, and bet on basically anything. The goal is absolute returns (make money whether the market goes up or down), not just beating an index. Fees are famously brutal: the classic '2 and 20' means 2% of assets plus 20% of profits.
“He left Goldman to start his own hedge fund and immediately raised half a billion.”
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Used loosely as shorthand for the sharp-elbowed, ultra-rich end of Wall Street. The villains in most finance horror stories.
“Another hedge fund got caught front-running retail traders.”
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Hedge fund In A Sentence
He left Goldman to start his own hedge fund and immediately raised half a billion.
Another hedge fund got caught front-running retail traders.
Origin & Usage
Coined around Alfred Winslow Jones, who in 1949 set up a fund that 'hedged' long positions by also shorting stocks.
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