hedge-fund-share

Here’s 48 Hedge Fund Terms Every Investor Should Know

Here's 48 Hedge Fund Terms Every Investor Should Know

Here’s 48 Hedge Fund Terms Every Investor Should Know

For many investors, hedge funds appear to be shrouded in mystery.

There’s a practical reason for this. The best hedge funds are extremely careful about protecting their ideas and tactics, because they provide an important competitive advantage for making profits. An example that illustrates the paranoia around this was described in Flash Boys by Michael Lewis, where he noted that at the ultra-secretive firm Citadel, it took five ID card swipes for an employee to simply start her day.

There’s also a psychological reason for the secrecy – which is that hedge funds want to appear incredibly complex and sophisticated, so that accredited investors will part with their money in order to get exposure to them. While hedge fund tactics are often intricate and extremely lucrative, understanding how they work is not as impenetrable as it may seem.

Hedge Fund Terms Investors Should Know

Today’s infographic comes to use from StocksToTrade, and it captures 48 terms that can serve as an entry point for any investor into the mysterious world of hedge funds.

It covers essential ideas around how hedge funds make their bets, such as: arbitrage, hedging, pairs trading, alpha, and beta. The infographic also looks at hedge fund terms around measuring performance and risk, as well as words that describe fee structures and payouts.

Interestingly enough, we live during a time when modern technology has also allowed retail investors more access to these types of tactics than ever before. Take a look at this infographic on alternative investments, which gives examples of ETFs and mutual funds that mimic traditional hedge fund strategies such as long/short equity, merger arbitrage, or managed futures.

Want to learn more about how hedge funds work?

This post on WallStreetMojo outlines nine popular hedge fund strategies, or check out our favorite book on global macro investing: Inside the House of Money by Steven Drobny.

Subscribe to Visual Capitalist

Follow Visual Capitalist on Twitter
Like Visual Capitalist on Facebook
Follow Visual Capitalist on LinkedIn

Sponsored Infographics

Company Spotlight

The Money Project

The War on Cash
Trump's Entire Financial History Video
All of the World's Money and Markets in One Visualization

Embed This Image On Your Site (copy code below):



Mornings are better with Visual Capitalist.coffee_email1

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.