Hedge Funds For Dummies, 2nd Edition by Ann C. Logue

Hedge Funds For Dummies, 2nd Edition by Ann C. Logue

Part 1 What Is a Hedge Fund, Anyway?

IN THIS PART . . .
You read about hedge funds in the financial press. You 
hear about their ability to generate good returns in all 
market cycles. And you wonder — just what is this 
investment? In this part, you find out. Part I covers 
definitions and descriptions you hear in the hedge fund 
world, offers the basics on just how much regulatory 
oversight hedge funds have, and lets you know how to 
buy into a hedge fund.

IN THIS CHAPTER
» Knowing the long and short of 
hedge funds
» Discovering the history of 
hedge funds
» Factoring a fund’s position on alpha 
into your investment decision
» Distinguishing between absolute-

return funds and directional funds
» Acquainting yourself with the 
important hedge fund players
» Perusing the fee structure of 
hedge funds

Chapter 1
Hedge Funds: Alternative 
Assets and Alternative 
Strategies

You see hedge funds in the news all the time, but it’s hard to know exactly 
what they are. That’s because, at its essence, a hedge fund is a bit of a mys-

tery. A hedge fund is a lightly regulated investment partnership that invests 
in a range of securities as the managers attempt to increase expected return while 
reducing risk.
Hedge funds are part of a growing class of alternative investments. These are funds 
that look to upend traditional relationships between risk and return, offering 
investors better expected returns for a given level of risk. This doesn’t mean that 
they are necessarily safer or better performing, by the way. There’s much 

Hedge Funds For Dummies, 2nd Edition by Ann C. Logue