How Hedge Funds Work
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Hedge funds are known as institutional investors. They, along with mutual funds, pension funds, insurance companies, commercial banks, and endowment funds, invest on behalf of other individuals/investors by buying and selling big chunks of debt and equity instruments. Here, you will learn about the history of hedge funds and its key features. What are the different types of hedge funds?
Types of hedge funds
- The principal classification of hedge funds is based on recommendations from the International Monetary Fund and offers 3 basic types:
- Global funds. They perform operations on markets of any countries and build their investment strategies by analyzing statistics of different companies individually.
- Macro funds. They operate on the market of some particular country and make decisions to open any given position on the basis of the current market situation in this country.
- Relative value funds. They are classic hedge funds, which operate on national markets and implement standard operation schemes, which are based on differences in the price or rate of the same or similar assets.