Characteristics of Hedge Funds
Hedge Funds are commonly referred to as "absolute return strategies", which means that many are designed to seek positive returns in most market conditions. Compared with traditional portfolios consisting only stocks and bonds, portfolios that have included Hedge Funds have given higher returns at similar levels of risk. They have now emerged as an alternative asset class of investment for investors.
Hedge Funds as separate assets class have many distinctive characteristics compared to other forms of traditional and alternative investment options. They seek to offer attractive returns with low volatility, which are less correlated to market scenario, and provide benefits of portfolio diversification with investment in various financial instruments.
Some of the distinctive characteristics of Hedge Funds are discussed below: