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Hedge Funds

Like mutual funds, hedge funds pool investors’ money and invest the money in an effort to make a positive return.  Hedge funds typically have more flexible investment strategies than mutual funds.  Many hedge funds seek to profit in all kinds of markets by using leverage (in other words, borrowing to increase investment exposure as well as risk), short-selling and other speculative investment practices that are not often used by mutual funds.

High-yield Bond (or Junk Bond)

Bonds that are believed to have a higher risk of default and receive low ratings by credit rating agencies, namely bonds rated Ba or below (by Moody's) or BB or below (by S&P and Fitch). These bonds typically are issued at a higher yield (for example, a higher interest rate) than more creditworthy bonds, reflecting the perceived higher risk to investors.

High-Yield Investment Programs

High-Yield Investment Programs (HYIP) are unregistered investments typically run by unlicensed individuals – and they are often frauds. The hallmark of an HYIP scam is the promise of incredible returns at little or no risk to the investor. A HYIP website might promise annual (or even monthly, weekly, or daily!) returns of 30 or 40 percent – or more. Some of these scams may use the term “prime bank” program. Fraudsters may use social media to promote a HYIP website or may encourage investors to use social media to share information about a HYIP website with others.

Householding Rules

Investors often invest in funds through a variety of individual and family accounts and, as a result, sometimes receive multiple copies of the same documents from those funds.  To avoid duplication, the SEC allows funds to deliver a single copy of the same document to investors who share the same address.