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Hedge funds

These bogey-men of the financial markets are often blamed, usually unfairly, when things go wrong. There is no simple definition of a hedge fund (few of them actually hedge). But they all aim to maximise their absolute returns rather than relative ones; that is, they concentrate on making as much money as possible, not (like many mutual funds) simply on outperforming an index. Although they are often accused of disrupting financial markets by their speculation, their willingness to bet against the herd of other investors may push security prices closer to their true fundamental values, not away.

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