What Is a Hedge Fund?

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A hedge fund is an investment group that has pooled investors' money to purchase a number of different assets. Invest in hedge funds that purchases stocks, operating companies, real estate or oil with information from a financial consultant in this free video on investments.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

Have you ever considered putting your money with other people's money, and then going out and buying, say, a piece of property or an operating company? Hi, this is Roger Groh at Groh Asset, and today we're here to talk about hedge funds, what they are and what that term really means. In the old days, principally that focused on private businesses that were bought with pools of money, where people would then share the profits in that company. Today, that has become a much broader term, where these are investment groups that have come together, where they have gone off and purchased any number of assets. It could be mutual funds that they've bought. It could be stocks, it could be operating companies, it could be real estate, it could be oil. As a matter of fact, I read today one of the largest groups today in hedge funds are actually buying oil tankers, and then filling those tankers with oil and anchoring them off the coast of Norway, betting that the price of oil will go up over the next months, and they will benefit from that because they purchased oil, in their minds, cheaply. So, a hedge fund is simply an investment group that has gone out and purchased whatever it is that they said. Now, hedge funds are very limited in terms of the type of investor that can come in. You have to be an ultra-sophisticated and very high net worth individual to go in. Chances are, you've had your lawyer and tax attorney review any documents that you may have signed, or looked at the underlying assets that are going to be purchased. So, be careful. Hedge funds are not for the faint of hearted. Hope that helps a little bit. I'm Roger Groh with Groh Asset, and thank you very much for spending time with me.

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