subject: Hedge Fund Investment Management – Howel Thomas, Hong Kong [print this page] Hedge Fund Investment Management Howel Thomas, Hong Kong
About Hedge Fund
If you are looking to invest but worrying about market conditions, you should know about the term Hedge Fund. The term hedge fund is used to indicate a 'hedge' against investment deterioration.
It can be defined as a managed portfolio that has targeted a specific return goal regardless of market conditions. Hedge funds specialize in gaining maximum returns for minimum risk. Hedge funds use a wide variety of different investing strategies to achieve this goal and generally these strategies are managed and executed by a portfolio manager.
Strategies
Different strategies are used by the portfolio manager of a hedge fund which includes short selling, arbitrage, hedging and leverage. Because of these options, the portfolio manager remains flexible and weathers the various storms of the market.
Short selling is a technique used by investors who try to profit from the falling price of a stock. Short selling means borrowing a security from a broker and selling it, with the understanding that it must later be bought back (hopefully at a lower price) and returned to the broker.
Arbitrage means attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.
Offsetting the Price Risk
Hedging is the practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. A long hedge involves buying futures contracts to protect against possible increase in prices of commodities. A short hedge involves selling futures contracts to protect against possible decline in prices of commodities.
Leverage is the use of borrowed funds at a fixed rate of interest in an effort to boost the rate of return from an investment. Increased leverage causes the risk and return on an investment to also increase.
Where to go
The main feature that makes hedge fund investment different from other forms of investments is in the fact that the fund can accommodate both short term and long term investment plans at the same time. Howel Thomas, Hong Kong, the Chief Executive Officer of Wykeham Capital Limited and previously held a number of positions in the derivatives research and sales departments. You can invest you valuable in the safe hands there.
