Hedge fund is a kind of financial fund that combines financial derivatives such as financial futures and financial options with financial institutions and takes high-risk speculation as a means and profit. 202 1 what is a hedge fund? What are the characteristics of quantitative hedge funds? I hope I can help you.
What is a hedge fund?
Financial futures and financial options are called financial derivatives, which are a means to hedge and avoid risks in financial markets. Over time, in the financial market, some funds use financial derivatives to adopt various profit-oriented investment strategies, namely hedge funds. Hedge fund is based on the latest project investment theory and practical operation skills in the financial market. Various financial derivatives are widely used in high-risk and high-yield investments.
Hedge fund, the English name of hedge fund, refers to risk hedge fund, which originated in the United States in the early 1950s. At that time, the business purpose was to use financial derivatives such as futures and options and related practical skills such as short selling and risk hedging of different stocks to avoid and resolve investment risks to a certain extent. The first Jones hedge fund with limited cooperation was born in 1949. Although hedge funds appeared in the 1950 s, they did not attract much attention in the next 30 years. Until1980s, with the development of financial liberalization, hedge funds had more extensive investment opportunities, and then entered a stage of rapid development. In 1990s, the threat of global inflation gradually weakened, financial instruments became increasingly mature and diversified, and hedge funds entered a stage of vigorous development.
What are the characteristics of quantitative hedge funds?
1 quantitative hedge fund risk is controllable, and its downside risk is small through hedging short mechanism.
Quantify the rational investment of hedge funds, strictly implement the model program, once the goal is achieved and the corresponding rules are triggered, computers will be bought and sold immediately, which can effectively overcome the weakness of human nature.
3 Quantify the long-term stability of hedge funds. Quantitative hedge funds aim at pursuing absolute returns and have low correlation with the performance of the stock market, so they are more prominent in the sharply adjusted market.
Quantitative hedge funds are continuously dispersed. Instead of digging deep into a stock, they earn a little money on multiple stocks through stock selection ability.
Compared with common hybrid funds and equity funds, quantitative hedge funds have lower risk expectations and are suitable for users who pursue long-term stable returns to invest. It is mainly to use quantitative investment to find excess returns, and then short stock index futures to obtain stable excess returns.
What are the characteristics of hedge funds?
1 complex investment activities: various financial derivatives such as futures and options have gradually become the main operating tools of hedge funds. These derivatives were originally designed to hedge risks, but because of their low cost, high risk and high return, they have become effective tools for many modern hedge funds to speculate.
2 High leverage of investment effect: Typical hedge funds often use bank credit to expand their investment funds several times or even dozens of times on the basis of their original funds with extremely high leverage, so as to maximize their returns.
The high liquidity of securities assets of hedge funds makes it convenient for hedge funds to use fund assets for mortgage loans.
4 The financing method belongs to private placement: the organizational structure of hedge funds is generally partnership. Fund investors buy shares with funds, provide most of the funds, but do not participate in investment activities; Fund managers join in with funds and skills, and are responsible for the investment decisions of funds.
Due to the high risk and complex investment mechanism of hedge funds, many western countries prohibit them from publicly recruiting funds to protect the interests of ordinary investors.