Hedge funds minimal risk


Part 1

Analogue of the cash spot market in the futures market is the market for managed futures (narrower term "managed futures" means the special account through which funds and various organizations operate in commodity futures contracts). Associated with this market such important classes of managed funds such as funds of funds and hedge funds.

Managed money markets

Hedge funds are the most important kind of specific segments of the global financial market - the cash markets, more precisely, managed futures.

The term "managed money markets" came into wide use for more than 15 years ago as an alternative to the "normal" financial market. The new term was intended to reflect the fact that in this sector of the market's most popular funds are essentially substitute conventional financial instruments that govern this market segment of highly professional managers from various financial institutions, and are very good at tactics and strategy of diversification and hedging open positions selected market segments.

Managed funds, the financial markets are different from each other - they are for everyone. The question is how to choose the best of the category of fund that matches your investment strategy. When you select a fund should be guided by different criteria, depending on the individual preferences of the investor. The most important of them - the yield of the Fund, the expense ratio, the presence of additional charges. Play a significant role and impact of experience selected fund managers. Managed futures on various financial tools allow managers and their investors a number of advantages compared with operations with the same asset in the spot market

- Futures allow investments in these markets without any difficulty and overhead costs related to the acquisition of shares or other financial instruments;

- Conducting trading on margin allows you to participate in the fluctuations of the market, not limiting themselves with any obligations in terms of capital;

- Transactions in the futures market is much cheaper than the deal on the spot market of the securities;

- In the futures market is much easier place orders Short Sell;

- Fund managers responsible for large portfolio investments can hedge their price, defending himself from a short position of speculators and not making the actual sale of assets themselves.

Two examples of

Hedge funds (Hedge Funds) - these are managed funds, which hedge the majority of its open positions in financial markets. The term hedging is usually used in connection with operations in the futures market, although it is applicable in the spot market. Hedging - the process of opening a position (usually in the futures or options market segments), approximately equal to the potential yield, but opposite in direction to an already existing on the spot market. In other words, when it comes to the futures market, futures (optional) is acting as a replacement later trade in the spot market.