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Hedge Fund Industry Milestones

The hedge fund industry enjoys high popularity among investors, which is shown by its estimated value of $1 trillion. There are around 8350 hedge funds that operate within it. Additionally, the hedge fund industry enjoys an approximate growth of 20% every year.

Different strategies can be applied in the hedge fund industry. Some of them include the so called leveraging and derivatives. However, not all of the hedge funds apply them, which leads to a more conservative approach toward investing. The use of derivatives and shorting of equities is commonly used in the industry for the purposes of reducing the potentially high levels of risk. Additionally, the applied hedge fund strategies success is independent of the movement of bond or equity markets. On the other hand, success is dependent on the amount of capital that can be used before the disappearance of returns. This leads to the imposition of limits on the amount of capital that can be incorporated.

The dependence on the services of professional managers or management teams is typical for hedge funds since most of them possess a high degree of specialization. A general characteristic of hedge fund managers is their high level of discipline needed for the field.

The history is full of examples of hedge funds outperforming traditional equity and bond indexes. Hedge funds have gained popularity among many endowments and pension funds.

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