Amid the intense market volatility seen over the last
several years, investors are looking for ways to mitigate adverse
portfolio fluctuations.
Hedge funds, with their historically low correlation to
traditional asset classes, respond to this concern (although
correlations have started to increase considerably over the past
three years). These alternative investment vehicles may offer
investors added diversification and a better chance to outperform
the market over a longer timeframe. However, before committing
capital, investors should be familiar with all facets of hedge fund
investing.
The term "hedge fund" is a broad category that
commonly refers to a private investment fund managing a large sum
of money at its own discretion, sometimes employing strategies to
"hedge" against certain market risks. Perhaps the most
defining characteristic of hedge funds is that they are subject to
fewer regulatory requirements than traditional investments. This
allows the hedge
