Hedge fund

A pooled fund, lightly regulated, that may use leverage, short selling and derivatives. Strategies vary widely.

Where you will meet it

Hedge fund comes up in 18 learning outcome notes across the FRM syllabus. A few of them:

• Fund Management
  FRM Part I · Financial markets and products

  “Hedge funds are pooled vehicles like mutual funds but differ in regulation, investors and freedom.”

• Anatomy of the Great Financial Crisis of 2007-2009
  FRM Part I · Foundations of risk management

  “Subprime defaults rose and two Bear Stearns hedge funds collapsed.”

• Counterparty Risk and Beyond
  FRM Part II · Credit risk measurement and management

  “Insurers and hedge funds can face collateral calls when markets move or ratings fall.”

• Liquidity and Leverage
  FRM Part II · Liquidity and treasury risk measurement and management

  “Hedge funds face higher prime broker margins and investor redemptions, and open-end funds face redemptions against illiquid holdings.”

See also

Leverage

All terms beginning with H · FRM glossary

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