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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."
{{def|Hedge fund|/hɛdʒ fʌnd/|n|}}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 liability partnership|limited partnership]], that engages in speculation using [[Margin lending transaction - SFTR Provision|credit]] or borrowed [[capital]].”


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]].
That neglects to mention how much they charge, or that they talk a lot about [[alpha]] — even ''[[leveraged alpha]]'' — and have the [[Backtesting|back-tests]] to prove it — while doing a lot of [[vega]].


Now be assured, leveraged alpha is technically possible, but  --- yeah.  
They also like shorting. This was a more fun game before the world got rocked on its axis by ''people on Reddit'', and the Wikipedia effect came to the financial services market.


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.
[[Vega]], by the way, is not a drug.<ref>OR IS IT? For those pursuing yield return, the lure of [[leverage]] can be a little addictive, which may or may not be a plot point in {{author|Hunter Barkley}}’s forthcoming novel {{br|The ISDA Protocol}}.</ref> In fairness, in speaking of credit and borrowed capital, it does nod in [[Vega]]’s direction.


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]].
===Hedge funds hang out with===
*[[Prime broker]]s
*[[Administrator]]s
*[[Depositary|Depositaries]]
*[[Hookers]]
 
{{sa}}
*[[GameStop]]
*[[Backtesting]]
*[[Greeks]]
*{{tag|AIFMD}}
*[[Leverage]]
*[[Synthetic prime brokerage]]
{{ref}}
{{c|Prime Brokerage}}

Latest revision as of 10:14, 16 August 2021

The Jolly Contrarian’s Dictionary
The snippy guide to financial services lingo.™


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Hedge fund /hɛdʒ fʌnd/ (n.)
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 — and have the back-tests to prove it — while doing a lot of vega.

They also like shorting. This was a more fun game before the world got rocked on its axis by people on Reddit, and the Wikipedia effect came to the financial services market.

Vega, by the way, is not a drug.[1] In fairness, in speaking of credit and borrowed capital, it does nod in Vega’s direction.

Hedge funds hang out with

See also

References

  1. ↑ OR IS IT? For those pursuing yield return, the lure of leverage can be a little addictive, which may or may not be a plot point in Hunter Barkley’s forthcoming novel The ISDA Protocol.
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