Hedge funds are private investment firms that trade a wide swath of financial assets (such as the stock and debt of publicly traded companies), aiming to make money when markets are both up and down.
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Hedge funds are known for chasing big returns—and taking big risks to get them. This explainer breaks down how they work, why they’re different from mutual funds, and the strategy first introduced in 1949 that still shapes hedge fund investing today.
Commodities traders look at all of these things as assets, placing short-, medium-, and long-term wagers on how much each is really worth.
Just 12% of family wealth reaches the third generation, and 3% makes it to the fourth. Family offices work to prevent that kind of attrition and ensure family fortunes are passed to the next generation.
Since Alfred Winslow Jones formed the first hedge fund in 1949, traders have rolled out an increasingly complex array of investment strategies. They all aim to beat increasingly efficient markets and/or to provide ample downside protection against sell-offs.
Hedge fund traders tied to insider trading by probing prosecutors are relatively rare. When billionaire hedge fund legend Steve Cohen, founder of SAC Capital, pleaded guilty to trading on inside information, Wall Street trembled. The outcome of the case remains a cautionary tale for traders today.
Annual investment letters from Howard Marks, the billionaire cofounder of top distressed debt shop Oaktree Capital Management, are required reading on Wall Street. The prolific writer and investor explains the distinction between the folly of trying to time the market and the necessity of paying attention to market cycles. The difference makes all the difference in returns.
These days, hedging your portfolio isn’t just for hedge fund managers. An explainer from Robinhood delves into what a hedged position actually is, why traders put on hedges, and how you, too, can work to guard your holdings against a market downturn. The idea is to derive gains from your portfolio when markets are trending up, down, or sideways.
Most investors buy stocks with the expectation that those stocks will be worth more tomorrow than they are today. Short selling, known as “shorting,” a stock is the opposite: The investor is betting the stock will drop in value.
The Medallion Fund, the famously secretive quant fund that invests billions of dollars for the partners and employees of a single firm with a legendary track record, has trounced the market for more than three decades. While its results are an extreme outlier, this visualization showcases the power of compound interest.
The world’s top 10 hedge funds based on total assets under management include Ray Dalio’s Bridgewater Associates and Citadel.
The United States is home to more than 33 million businesses, the vast majority of which are small businesses, with millions being created (and others closing shop) every year. These businesses often rely on loans, provide the goods and services that keep the economy flowing, and sometimes even grow large enough to enter public markets or provide private investment opportunities. Explore key topics central to business and finance, from the role of the Federal Reserve to how initial public offerings work, how millions of American students finance higher education, and more.