Hedge fund: Difference between revisions

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Oxford dictionary calls a Hedge fund an "offshore investment fund, typically formed as a private limited partnership, that engages in speculation using credit or borrowed capital."
We define a [[hedge fund]] as a couple of guys with a bright idea and a rented office in Mayfair.


That neglects to mention how much they charge, or that they talk a lot about [[alpha]] -= even ''[[leveraged]]'' alpha - but do a lot of [[vega]].
The Oxford English Dictionary says it is an “offshore [[investment fund]], typically formed as a private limited partnership, that engages in speculation using credit or borrowed [[capital]].”


Now be assured, leveraged alpha is technically possible, but  --- yeah.  
That neglects to mention how much they charge, or that they talk a lot about [[alpha]] — even ''[[leveraged alpha]]'' — while doing a lot of [[vega]].


What most people claim to be leveraged alpha is, usually, really plain old [[vega]] - that is, just leverage. If your market benchmark is beating the borrowing rate, you will make money by borrowing.
===Hedge funds hang out with===
*[[Prime broker]]s
*[[Administrator]]s
*[[Depositary|Depositaries]]
*[[Hookers]]


If someone pitches "leveraged alpha" product to you, they are most likely a charlatan - which you would expect, it being the financial markets and all - and a mediocre manager. Especially if they use [[back-testing]] to demonstrate their historical [[alpha]].
===See also===
*[[Greeks]]
*{{tag|AIFMD}}
*[[Leverage]]
*[[Synthetic prime brokerage]]

Revision as of 15:01, 12 October 2016

We define a hedge fund as a couple of guys with a bright idea and a rented office in Mayfair.

The Oxford English Dictionary says it is an “offshore investment fund, typically formed as a private limited partnership, that engages in speculation using credit or borrowed capital.”

That neglects to mention how much they charge, or that they talk a lot about alpha — even leveraged alpha — while doing a lot of vega.

Hedge funds hang out with

See also

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