What is a Hedge Fund?


A hedge fund should be viewed as a very important
tool for a pension or an endowment manager to use in building a diversified portfolio,
and this has been recognized over the years as an important change in the way pensions
and endowments are managed. In fact, ten years ago, most of the money under management in
hedge funds was from family wealth. Today, some sixty-five percent of the funds under
management come from pensions and endowments. Over the years, professional money managers
observed that hedge funds not only generate returns, they also protect against downside
risk, making them an essential component of money management. This means today that hedge
funds across the United States are managing retirees’ futures; they’re helping college
students who happen to be on scholarship; they’re working strongly for academic research
in health and other fields; and they’re even providing resources for economic development
in hometown America. All are benefitting from the work that hedge fund managers provide
to pensions and endowments. It is indeed a winning formula.

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