Hedge fund

A hedge fund is a specialist investment product that institutions and wealthy individuals may often purchase as part of their overall investment portfolio. Generally speaking, hedge funds carry high risk and high reward ratios. Typically, the minimum investment any individual can make in a hedge fund is £100,000.

Hedge funds use derivatives in collaboration with normal shares or equity to maximise the potential reward of any investment. As a result, hedge funds tend to be very price volatile, and experience large gains in positive market conditions, and substantial losses during unexpected financial crisis.