How do hedge funds make profit if their risks are hedged? PDF Print E-mail
ANSWERED QUESTIONS - ANSWERED QUESTIONS
Sunday, 15 November 2009 13:37
Q. If Hedge funds tend to "hedge" their investments, then how do they make profit?

A. Hedge funds started out as funds holding hedged positions. The hedge was partial, since if you hedge your risks completely, the investment will make no money.
 
 
 
Today many hedge funds don't use hedging techniques at all. However. the title "hedge" still remains, because they are allowed to hedge, unlike mutual funds, for which hedging is mostly prohibited (except the 130/30 funds, which can sell short).

Good luck!

Moni.


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