Hedge Funds

What
These are investment funds where the fund managers have a far wider range of investing options available to them than managers of unit trusts,

For instance, hedge funds can try to take advantage of a falling market by selling financial instruments they do not own yet - a technique known as short selling. They can also borrow money to use as capital, or invest.

Pros
The greater investment flexibility provides an opportunity for exponential returns.

Cons
There is a lack of transparency on what the holding of the funds are. The performance of hedge funds is highly dependent on the fund managers' strategies.

Best for
High net worth investors who have capital to invest and the ability to within losses.

Retail investors who want some exposure to hedge funds are advised to invest in a ''fund of hedge funds'', which is a hedge fund that invests in other hedge funds, so as to lower their risks. For example, DBS Absolute Return Fund gives investors the opportunity to invest in a portfolio of hedge funds managed by more than 20 specialized hedge fund managers.