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The very first Hedge
Fund was started by Alfred W. Jones in 1949. Though his Hedge Fund greatly
outperformed mutual funds of that time, Hedge Funds really didn't gain interest
until the 60's.
Since the 1960’s,
Hedge Funds have attracted an increasing number of individual and institutional
investors who have recognized the value Hedge Funds have to offer:
diversification of investment, and the potential to produce higher returns at
lower risk.
Hedge
Funds have been proven to correlate very little to traditional asset classes. A
portfolio that includes hedge funds, or any asset class whose returns depend
less on the market, will benefit greatly from the added diversification.
Employing vastly
different investment strategies and approaches to risk-management, Hedge Funds
are defined by their structural characteristics rather than their
"hedged" nature.
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