Hedge Funds Canada

There is no single or simple definition of a hedge fund. The term “Hedge Fund” generally refers to a fund that has: a non-traditional strategy; a focus on risk rather than reward; reduced correlation to traditional markets; and/or some form of performance based fee structure. It should also be noted that some funds that are termed hedge funds do not actually hedge against risk.

Canadian hedge funds typically have some or all of the following characteristics:

• Hedge funds seek superior risk-adjusted returns, on an absolute basis (i.e. positive returns, not a target return measured against an index or a benchmark).
• Hedge funds are generally available only to high net worth individuals or institutions.
• Hedge Funds are typically subject to less regulation.
• Hedge fund managers typically receive a performance-based fee.
• Hedge funds can use various hedging strategies many of which can make money under any market condition including bear markets.
• Many hedge fund strategies are not dependent on market direction and have a low correlation to the broad equity markets.
• Hedge Funds typically invest in an array of asset classes, derivative securities and use long and short positions, in addition to utilizing leverage to enhance returns.