These are funds that enjoy a great deal of flexibility as to the investment strategies that can be used. These strategies are often called "alternative investment strategies." These funds are usually structured so that stock or bond market fluctuations have little or no influence on their returns.

Hedge fund investments, which are made up of investments such as shares of private issuersAn issuer is a company that offers securities, such as shares, to the public in exchange for funds that it will use to improve its financial situation, carry out projects or develop new markets. , derivatives, etc., are generally suitable only for investors able to support high risks. And likewise for the strategies used, which include short sellingShort selling occurs when you sell a security you do not own.
An investor borrows a security from a dealer or other financial intermediary and sells it immediately on the market. The investor will later have to buy back the security and deliver it to the intermediary.
If the security declines in value, the investor can buy it back (redeem) at a lower price. His profit will be the difference between the selling price and the redemption price.
This investment strategy can be extremely risky. If the value of the security rises, the investor will have to pay back the difference and will therefore suffer a loss. Theoretically, the loss could be unlimited. For sophisticated investors only! , leverageLeveraging refers to the magnification of potential gains and losses, for example by contracting debt or using derivatives such as call and put options.
Leverage: Borrowing money in order to invest increases the potential gains, as well as the potential losses, of any investment. Loan-based investments therefore carry more risk and require caution on the part of investors. If you are thinking of borrowing to invest, make sure you are fully aware of the potential loss this could represent should the value of your investment drop.      , narrow-based investments, and investments in companies experiencing financial difficulties.

Expected return

The return consists of capital gains (losses), and depends on the success of the strategies used. Because of the activities specific to these funds, the return is not usually linked to stock indexes or to the economy in general. They seek to generate positive returns regardless of economic conditions, but in practice this goal is not always achieved.

Liquidity

They may carry liquidity restrictions. For example, some hedge funds may require at least one month’s prior notice for the redemption of securities.

Risk: medium to high

Depending on the strategies used, the risk can vary from one fund to the next. Some funds employ strategies that can be very risky, for example borrowing to invest (leverageLeveraging refers to the magnification of potential gains and losses, for example by contracting debt or using derivatives such as call and put options.
Leverage: Borrowing money in order to invest increases the potential gains, as well as the potential losses, of any investment. Loan-based investments therefore carry more risk and require caution on the part of investors. If you are thinking of borrowing to invest, make sure you are fully aware of the potential loss this could represent should the value of your investment drop.      ), short sellingShort selling occurs when you sell a security you do not own.
An investor borrows a security from a dealer or other financial intermediary and sells it immediately on the market. The investor will later have to buy back the security and deliver it to the intermediary.
If the security declines in value, the investor can buy it back (redeem) at a lower price. His profit will be the difference between the selling price and the redemption price.
This investment strategy can be extremely risky. If the value of the security rises, the investor will have to pay back the difference and will therefore suffer a loss. Theoretically, the loss could be unlimited. For sophisticated investors only! , etc.