What is a hedge Fund? The impact on the global economy


2019-06-11 23:20:25




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A Hedge Fund known for almost 70 years. In the domestic market, they came much later, so few investors can confidently answer the question: "What is a hedge Fund?". About the features of their work and the possibility of earning money with the help of these funds will be discussed in this article.

what is a hedge Fund

American hedge Fund history

The American was the Creator of the first hedge Fund. It happened in 1949. However, there is evidence that in the years of the great Depression was the background to the establishment of such schemes. However, the precarious position in the market prevented the development of such areas.

Hedge funds are very important for business investment. Their mass adoption occurred in the 80-ies of XX century. What is a hedge Fund learned of ordinary citizens.

US Policy in this matter is that the ability to invest the power is not everything. This can make investors managing assets over hundreds of millions of dollars.

One of the factors of popularity that the competent strategy of development allows you to be in profit not only when the market is rising but when it falls.

Soros, for example, popularized the hedge funds. After all the activities of his company "quantum" has brought huge profits a billion dollars, pound sterling collapses.

American hedge funds

In our country officially allowed hedge funds only in 2008. It's been almost 10 years and now there are only 27 – is a small number.

What is a hedge Fund and how to invest?

At the heart of the henge funds a few simple principles:

  • Operate in any market;
  • Deal with all securities and derivatives.

This type of activity does not restrict its work to any part of, its assets are formed from the entire spectrum of instruments of stock exchanges and of Finance. Thanks to this accessibility, the investor is not dependent on the market. Here the rule is classic funds doesn't work: i.e. if there is a falling market, the shares may not be impaired.


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In this sense, the hedge funds enough tools to make money on declining prices. Most of the assets they had reinforced the derivatives.

Thus, hedging is a risk management system, where purchasing a single tool, adversely affecting the market, can affect other instrument for the purpose of benefits.

hedge funds

For Example, if you take a dollar loan, the consumer is solely beneficial to the strengthening of the ruble if its revenues are denominated. But if the dollar will go up for the same initial data, the borrower will be in loss. Large corporations, unlike ordinary consumers, can not tolerate such a situation and the course is hedging, for example, buying futures on currency manipulation at a reasonable price.

Here hedging acts as an insurance policy to minimize losses, but it cannot completely eliminate all risks.

How to make money?

The Beauty of hedge funds is that they are profitable in any market environment. The infamous Soros Foundation in the year earned approximately a billion dollars. During the emerging crisis, hedge funds were shooting the cream of the profit to 15 % for the year. Some received 500 %, and 1000 % over the ten year period.

All of these funds were guided by the principle of buying undervalued securities and selling overvalued.

For undervalued securities distinctive record low of cheapness, when it is considered that these assets have some potential. Thus, it is assumed that they will acquire their positions of growth. With overvalued, the opposite is true.

This strategy is primitive, since in reality such situations, great variety. It is characteristic that, for example, a large hedge Fund Extranet Investment is almost useless with their money. Often, these organizations use credit, borrow the valuable assets from brokers.


What is a hedge Fund, In terms of its structure? To create such a Fund, the management company draws the investors, brokers and banks. Employees of the company to operate the buying and selling of securities.

The Foundation starts with investor interest. Capital manages the Fund. Bank-Garant holds assets of investors in various terms. As a rule, large banks with good reputation.

hedge Fund my account

The activities of hedge Fund monitoring by the administrator, it auditor, assessing the assets, keeping the books, preparing reports for investors.

The Primary broker responsible for the technical operation. Most importantly, it needs to have the capacity to carry out operations. Often as Prime brokers are large banks.

Types of hedge funds on the impact on global economy

There are many classifications of hedge funds, for example, the IMF provides:

  • Global – operate on international markets, building strategies, learning quotes individual organizations.
  • Macro funds prefer to conduct business in a single country. Based on the macroeconomic situations, they build a strategy on the market.
  • Funds relative value of work in the field of the national market. This is the classic hedge funds, based on the principles of relationship asset prices.

Russianthe legislation defines hedge funds as mutual. Investors must be investors of the highest calibre owning securities worth at least three million rubles. For the year, these investors must commit at least a dozen operations in the amount of 300 000 rubles.

How to become a member?

Participation in the domestic hedge Fund is not easy. And investors have no trust to the Russian management.

For Example, you can try a hedge Fund Extranet, representing a group of companies from the British virgin Islands. This resource has extensive experience in the market. The stated purpose of the company – increase your capital.

hedge Fund extranet investment

Hedge Fund personal account which is available immediately after registration, has recently entered the CIS market. Prior to this, the professionalism of the organization praised American and European users.

Wishing to invest in domestic henge-Fund, to open accounts in foreign banks. The investor must have the amount of one million dollars.

There is an alternative solution. For example, with the help of local middlemen can purchase a share in the foreign Fund. However, this risky scheme is meaningless because of the low protection of shareholder and difficulties of monitoring organizations.

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