Groundlearn / Glossary / Hedge fund
Hedge fund
A CFA term, defined in plain English with the distinction examiners test.
What it means
A privately offered pooled vehicle with broad freedom over strategy, leverage and short selling.
The exam angle
A legal structure and fee model, not a strategy. "Hedge fund" says nothing about what the fund actually does.
Where it appears in the syllabus
- Alternative InvestmentsCFA Level I · exam weight 6–9% · Private capital, real estate, natural resources, hedge funds, digital assets.
- Alternative InvestmentsCFA Level II · exam weight 5–10% · Commodities, real estate direct and listed, hedge fund strategies.
Related terms
- Leveraged buyoutAcquiring a company using a large proportion of borrowed money, secured against the target’s own assets and cash flows.
- Private equityEquity investment in companies that are not publicly traded, typically through a closed-end fund with a fixed life.
- Capital callThe general partner’s demand that limited partners transfer part of their committed capital.
- Capitalisation rateNet operating income divided by property value — a property’s unlevered income yield.
- Carried interestThe general partner’s share of a private fund’s profits, typically around 20%.
- Contango and backwardationContango is a futures price above the spot price; backwardation is a futures price below it.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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