In this chapter, you will learn about the first hedge fund established by Alfred Winslow Jones and how hedge funds differ from traditional investment products, such as, mutual funds. We will also delve into the five major hedge fund types according to the Morgan Stanley Capital International (MSCI) classifications and their various sub-strategies. Finally, we will discuss the most popular hedge fund offering, the fund of funds, and then conclude with a discussion about the information available on the Internet.

When you have completed this chapter, you should be able to:

• Understand the investment approach used by Alfred Winslow Jones

• List the major differences between hedge funds and mutual funds

• Describe five major types of hedge funds and the various sub-strategies

• Explain a fund of hedge funds

• Differentiate among the many styles followed by hedge fund managers