What financial instruments do hedge fund managers trade?
One of the hallmarks of hedge funds is the ability to use a diverse range of financial instruments and techniques. Depending upon the fund’s guidelines, hedge fund managers may trade stocks, bonds, cash, currency, futures, options and other derivative securities. Securities may be listed or unlisted and liquid or illiquid. They can sell short and buy on margin or leverage the portfolio outright. Many of these instruments and techniques are not used by most traditional managers due to their speculative nature and because they are not suitable for all types of investors.
