What different types of hedge funds are available?
There are at least as many different types of hedge funds as there are different types of mutual funds. Some of the following are very high-risk funds, while others have relatively low risk funds. Distressed Securities. The manager buys securities at a deep discount when companies are facing potential bankruptcy. Since most institutional investors cannot own securities that are rated below investment grade, the number of potential buyers is small and discounts may be more extensive than they otherwise would be. Emerging Markets. These funds invest in equity or debt of emerging markets, which typically have high rates of inflation and tend to be politically unstable and economically volatile. Equity hedge funds. These funds may be global or country specific. They typically short stocks or stock indexes they perceive to be overvalued as a hedge against downturns in equity markets. Fund of Funds. A fund of funds pools investments in many hedge funds with different strategies and asset cla
