Abstract:
Hedge funds have shown remarkable growth as an
asset class over the past few years, with an estimated
$1 trillion in assets under management in 2004, and
this figure expected to double in the next five years
(HFR Report, 2004). The term “hedge fund” has its
roots in the idea that high net-worth investors are more
interested in protecting themselves from downside risk
(i.e. hedging) than the conventional theories of risk and
return might suggest. Unlike traditional unit trusts,
which tend to be “long only” and measure performance
against index type bench marks, hedge funds actively
transact, seeking only positive returns, and to do so
engage in short selling, derivative products and
leveraged positions.
