Hedge Funds

Hedge Funds: Hmm... Well interesting topic. I was reading through the different types of hedge funds. This is one of the most complicated instruments in the market. The leverage is so high so is the risk..In short you are seeking absolute returns by doing anything..Thats really interesting..

But forget putting your money in hedge funds as normally there are very few investors in hedge funds and you need to have a significant amount of money to play in the hedge funds unlike stocks.. Moreover hedge funds are not allowed to be marketed so its something quite discrete and you dont have much liquidity in the market....

Ok i have told so much about hedge funds but what exactly is a hedge fund and why the hell am i blabbering about that in this blog..?????

Well hedge funds are funds made up of investments by a selected small group of investors who are ready to take big risks for absolute returns. Hedge funds seek to do anything to obtain high returns. Since there are only selected investors , these investors need to put in a huge amount of money...So if you look at the standard deviation to mean which is the risk to reward it will be very high. meaning you take big risk and you get big returns...In short you are getting a huge leverage by putting your money in hedge funds.. Moreover hedge funds are not allowed to be marketed like mutual funds or others portfolios and hence its liquidity is low...So either you make it or break it.

And why i am blabbering about that here? well its because there are hedge funds in commodities specially Oil. If you look at the performance of hedge funds in commodities mainly oil you will find that the oil based macro hedge funds had a horrible performance this year.. The returns are meagre about 0.005% ..So now you can imagine the risk...but as usual macros are betting on a market direction and so its straight forward ..either you get it right or wrong. well enough of this...

if you guys are seriously interested in hedge funds there are lots of topics to read in the web and its fairly interesting to read also..I am always fascinated by those people who made all these type of instruments.. So many means to produce leverage...thats fantastic...Kudos to them...

Well goto go back to the floor now...some pending works....will write about my life in the next blog.....