Investor's Passport to Hedge Fund Profits: Unique Investment Strategies for Today's Global Capital Markets

Introduction

For the purpose of this book, and in accordance with our outlook, we take a broader, more general view of just what makes a hedge fund a hedge fund. If you begin with the general definition that a hedge fund is a pooled investment fund that’s structured in such a way so as to reduce risk, preserve capital, and maximize returns in any given market climate, you are off to a good start. In fact, that is really, in a nutshell, what a hedge fund is.

The definition of a hedge fund has become both fluid and expansive over the years, to the point where there is now a wide variety of hedge fund styles to meet the discerning tastes and unique goals of investors. The more purist view of a hedge fund dictates that it engage in such stereotypical hedging strategies as short selling and derivatives used to hedge the performance of mainstay asset classes (notably stocks) to maximize gains and limit losses to as great an extent as possible. That said, you find we are not slaves to traditional hedge fund dogma, in the sense that if you do not use derivatives often, or at all, then you are somehow not really prosecuting a hedge fund approach to your portfolio; we are not tied to the idea that the exclusion or inclusion of select strategies makes or breaks you as a hedge fund manager. The real issue, in our view, is adherence to the aforementioned definition, and while your pursuit of realizing same may include your decision to utilize more typical hedge fund mechanisms, doing so is ...