What is a hedge fund? Impact on the world economy

Hedge funds have been known for almost 70 years. In the domestic market, they appeared much later, so few investors can confidently answer the question: "What is a hedge fund?". The peculiarities of their work and the possibility of earning money with the help of these funds will be discussed in this article.

American hedge funds: history

It was the American who was the first creator of the hedge fund. This happened in 1949. However, there are reports that even during the Great Depression there were prerequisites for the creation of such schemes. However, the precarious situation on the market prevented the development of this direction.

Hedge funds are very important for investment business. Their mass introduction occurred in the 80s of the XX century. What the hedge fund was learned by ordinary citizens.

The US policy on this issue is such that it is not possible for everyone to invest. This can be done by investors who manage assets of more than a hundred million dollars.

One of the factors of popularity is that a competent development strategy allows you to be in profit not only when the market is growing, but also when it falls.

Soros, for example, popularized hedge funds of the United States. Indeed, the activities of his company "Quantum" brought a huge profit of a billion dollars, knocking down the pound sterling.

In our country, hedge funds were officially allowed only in 2008. Almost 10 years have passed and now there are only 27 of them - this is a small figure.

What is a hedge fund and how to invest in it?

At the heart of henge funds are a few simple principles:

• Function in any market;
• Deal with all securities and derivatives.

This type of activity does not limit its work in any framework, its assets are formed from the entire spectrum of exchange and financial instruments. Due to this availability, the investor does not depend on the market. Here the rule of classical funds does not work: that is, if the market falls, shares may not depreciate.

In this sense, hedge funds have enough tools to earn on falling quotes. Most of the assets they backed with derivatives.

Thus, hedging is a risk management system where one instrument that affects negatively the market can be influenced by another instrument for profit.

For example, if a dollar loan is taken, the consumer is extremely profitable to strengthen the ruble, if his income is ruble. But if the dollar depreciates with the same initial data, the borrower will be at a loss. Large corporations, unlike the usual consumer, can not tolerate such a situation, and hedging is used, for example, by buying futures for currency manipulation at a similar price.

Here, hedging acts as a safety net to minimize losses, but it can not completely eliminate all risks.

How to earn?

The beauty of hedge funds is that they are profitable in any market situation. The well-known Soros fund earned about a billion dollars a year. In the time of the emerging crisis, hedge funds took off the cream at profit up to 15% per year. Some received both 500% and 1000% for a ten-year period.

All these funds were guided by the principle of buying up undervalued securities and selling overvalued ones.

For undervalued securities, a record low low cost is characteristic, while it is believed that these assets have a certain potential. Thus, it is assumed that they will gain their positions of growth. With overvalued - all the way around.

This strategy is primitive, because in reality there are a lot of such situations. It is characteristic that, for example, the large hedge fund Extranet Investment almost does not work with its funds. Often, such organizations use credit, borrow valuable assets from brokers.

Structure

What is a hedge fund? In terms of its structure? To create such a fund, the management company attracts investors, brokers and banks. Employees of this company operate with the purchase and sale of securities.

The work of the fund begins with the interest of investors. Their capital is managed by the fund. The guarantor bank keeps the assets of investors in different terms. As a rule, these are large banks with a good reputation.

The hedge fund is supervised by the administrator, who is also the auditor who assesses the assets, the leading bookkeeping department that compiles reports for investors.

The primary broker performs technical operations. The main thing is that he must have the ability to carry out operations. Often, large banks serve as primary brokers.

Types of hedge funds in influencing the global economy

There are many classifications of hedge funds, for example, the IMF allocates:

• Global - conduct their activities in international markets, building strategies, studying the quotes of individual organizations.
• Macro-funds prefer to conduct business within the framework of one country. Based on macroeconomic situations, they build a strategy of behavior in the market.
• Relative value funds work in the field of the national market. These are classic hedge funds, based on the principles of the relationship of asset prices.

Russian legislation defines hedge funds as mutual investment. Investors should be investors with high qualifications, owning securities worth at least three million rubles. For a year, such investors must commit at least a dozen transactions worth 300,000 rubles.

How to get involved?

Participation in the domestic hedge fund business is not easy. And investors do not have confidence in Russian management.

For example, you can try the hedge fund Extranet, representing a group of companies from the British Virgin Islands. This resource has a lot of experience in the market. The declared goal of the company is the multiplication of personal capital.

Hedge fund, whose personal office is available immediately after registration, recently entered the CIS market. Prior to this, the professionalism of the organization was appreciated by American and European users.

If you want to invest not in the domestic hendge fund, you should open an account with a foreign bank. An investor must have an amount of a million dollars.

There are also alternative solutions. For example, with the help of domestic intermediaries, you can purchase a share in a foreign fund. However, this risk scheme is meaningless because of the poor security of the shareholder and the difficulty of monitoring the organization.