Overview
The concept of a hedge has been around for many years, but probably the birth of the hedge can be traced to Karl Karsten in 1931. Karsten used the concept of betting on certain factors that drive the market, and hedging out the other risks from his portfolio. During a tough time for the market, Karsten was able to generate positive returns and significantly beat the broader market.
Today, a hedge fund is essentially a strategy that has a focus a particular market focus, and hedges out the other risks, typically by taking short positions.
Strategies
Below is a listing of some common hedge fund strategies.