Given this freedom, hedge funds usually aim to generate a return that is unconstrained by any benchmark.
With low volatility and generally low correlation to traditional indices.
The risks associated with the investment are due to changes in the value of the unit.
These in turn are affected by fluctuations in the financial instruments in which the fund’s assets are invested.
The world of hedge funds is indeed very diverse.
It includes funds of very different sizes, with different strategies and with very different risk/return profiles.
Some seek very high returns and take very high risks.
Others focus on generating stable returns over time with a strong emphasis on capital preservation.
Overall, hedge funds are able to generate positive returns regardless of market performance.
By significantly outperforming their benchmark.
What about venture capital ?
Many IT-related companies have sprung up through venture capital operations…
Venture capital is the provision of risk capital by an investor (usually institutional) to finance the start-up or growth of a business in a sector with high development potential.
A venture capital fund is willing to bear the investment risk in exchange for an equally high expected future return.
Many IT-related companies were born this way.
Google and Amazon are famous examples.
Today, however, given the saturation of the market and the lack of highly innovative ideas, most of this capital (including government capital) is no longer flowing into the real economy, but into hedge funds, especially hedge funds.
The result is there for all to see.
A financial system that is increasingly volatile and – inevitably – increasingly unstable.
Real trading or insider trading ?
It is necessary, however, not to be deceived by the false performance of funds managed by famous personalities (such as George Soros or Ray Dalio) who often give interviews in magazines or newspapers.
These are personalities who only make profits by manipulating the market through their public statements (for a few days or even a few hours).
Of course, after having taken a position in the previous days in the direction they want.
A very old tactic, used by Jesse Livermore in the 1920s and 30s.
Those who run profitable hedge funds are completely unknown to the general public.
They never give interviews, never appear in newspapers.
And they take on very few select clients, usually at the time of their inception.
In contrast, all economic/financial advisors, from private bankers to so-called financial planners (investment advisors) to actual managers (especially the famous ones that all the media trumpet), talk the talk.
But they don’t really do anything.
And when they do (in their personal capacity), they do not show the real results of their performance.
Only the theoretical ones.
Quite another thing.
In fact, their income does not come from profits made in the markets.
Where instead they constantly make losses, including banks.
But from their articles (usually false but formally unimpeachable analyses) published in newspapers.
From their conferences in hotels and lodges.
And especially from their consulting sites, where they sell signals to become rich and famous.
But which they do not use.
Because if they published the real results, everyone would know the truth that nobody wants to tell.
94% (at least) of the traders in the economic/financial sector do not make any money.
And 70-75% of them are in continuous hard losses.
