Hedge fund (from English hedge - a barrier, protection, insurance, a guarantee) - the investment fund focused on maximization of profitability at the set risk or minimization of risks for the set profitableness. It represents a pool of assets of investors, managed by professionals in the interests of investors. Use complex trading strategies that often include leverage , short sales and derivatives .
A hedge fund is a special private investment fund that is not limited by regulatory regulation, or is subject to weaker regulation, inaccessible to a wide range of people and managed by a professional investment manager. It has a special structure of remuneration for asset management.
American hedge funds are legally entitled to serve only professional investors ( English qualified investors ), with an initial contribution of at least $ 5 million for private investors and $ 25 million for institutional qualified investors . Unlimited regulatory regulation means the strategy is not limited and the margin leverage is not limited.
Professional funds in offshore jurisdictions offer more simplified conditions (capital for investing from $ 100,000 and there is no limit on the equity capital of the management company).
The first hedge fund was created by in 1949 . A. W. Jones was a sociologist, among other things, writing articles for American journals. The idea of making money with investments came to him while working on an article for Fortune on technical approaches to the market. The goal of AW Jones & Co, which was established in 1949, was to invest money (ours and friends) not for the sake of enrichment itself, but in order to get money for life and the opportunity to do what you loved. Jones himself was engaged in social problems, in particular, problems of poverty. His investment strategy was that he bought stocks, the price of which could rise, while simultaneously opening shorts for the company's shares, the prices of which, in his opinion, should have fallen. This reduced the risk. In addition, he found a way to track stocks with a high probability of growth  .
The strategy was winning, from 1960 to 1965 it was 325%, which is 100% more than the most profitable mutual funds . For ten years, the cost of investment Jones has grown by 670%. His rate was 20% of the profits  .
A successful strategy became widespread, in 1968 there were already 140 investment partnerships in the United States, which the US Securities and Exchange Commission assigned to hedge funds   .
Hedge funds have received the greatest development since the second half of the 80s of the last century. Then, among investment institutions, a new type of funds emerged, engaged in forecasting economic and political events and, based on this, forming their investment portfolio.
The most popular location for funds is London , which accounts for 31% of this market, followed by the United States with 27%.
Impact of hedge funds on the global economy
There are more than 12,000 hedge funds in the world managing assets of about $ 3 trillion (at the end of 2017).
The largest London funds are AHL  ($ 26 billion) and GLG  ($ 30 billion) managed by Man Group plc. At the same time, it is quite difficult to accurately assess the size of assets managed by a particular fund, rather than a team (as in the case of AHL and GLG) due to the legal structure of modern funds, which can be very complicated.
One of the most famous is the hedge fund Quantum George Soros , who played on the fall in the value of the British pound sterling. After Black Wednesday 1992, there was a devaluation of the English currency, and the Soros Fund earned $ 1 billion.
The crisis, which began in the United States in mid-2007 as a result of massive defaults on risky mortgage loans, led to a decline in world stock indices by 20%. The mechanism of the hedge funds at the time disclosed in detail by Michael Lewis in the bestseller of 2010 - “The big game for a fall. Secret springs of financial catastrophe ”  .
Hedge Funds in Russia
Hedge funds in Russia are less common due to complicated registration rules. Analogues of hedge funds in Russia (with a big stretch) can be called OFBU , which, to a greater extent, compared to mutual funds , can use futures and options , and therefore form an aggressive investment strategy. Also, some similarity with hedge funds has private trust management , in which the manager (an individual or a representative of an investment company or broker) can use arbitrarily aggressive investment strategies. Provided that the investor directly controls his account and all transactions are absolutely transparent, this does not contradict the existing regulatory framework.
- Index fund
- Lhabitant, 2007 , p. eight.
- Lhabitant, 2007 , p. ten.
- Dreyfus, Barbara, 2015 , p. 84
- AHL (Inaccessible link) . The appeal date is March 4, 2011. Archived February 16, 2011.
- GLG (Not available link) . The appeal date is March 4, 2011. Archived February 16, 2011.
- Michael Lewis . Big game for a fall. The secret springs of financial disaster = The Big Short: Inside the Doomsday Machine. - M .: " Alpina Publisher ", 2011. - 288 p. - ISBN 978-5961414912 .
- Vadim Kotikov, James Neil. Hedge Funds: Playing the market under the new rules. - M. , 2006.
- Francois-Serge Lhabitant. Handbook of Hedge Funds . - John Wiley & Sons, 2007. - 654 p. - ISBN 9780470026632 . (eng.)
- Barton Biggs. The hedger came out of the fog ... - 2007.
- Roman Kozhin Hedge Funds as an Investment Tool // Website Myrouble.ru
- Barbara Dreyfus. Rodeo on Wall Street: How cowboy traders staged the largest hedge fund collapse in history = Hedge Hogs. - M .: Alpina Publisher , 2015. - 276 p. - ISBN 978-5-9614-5088-0 .