Glossary

To hedge is to reduce risk by making transactions that reduce exposure to market fluctuations; for example, an investor with a long equity position might compensate by buying put options to protect against a fall inequity prices. A hedge is also the term for the transactions made to effect this reduction.

Each hedge fund on the Lyxor Platform is investable on a stand-alone basis through direct investments. They represent ideal tools to design efficient Fund of Hedge Fund portfolios and representative indices. The Lyxor Platform has become a reference in its industry with an unequalled track record. Its business model aims at removing the main sources of risks investors are typically exposed to when investing directly into hedge funds while restitute the performance of alternative investment. This platform covers all main strategies and represents a diversified investment universe combining a high level of transparency, risk control and liquidity (weekly). Each hedge fund on the Lyxor Platform is investable on a stand-alone basis through direct investments. Its business model aims at removing the main sources of risks investors are typically exposed to when investing directly into hedge funds while restitute the performance of alternative investment.

Hedge funds are speculative funds that seek to achieve high returns. They make abundant use of derivative products, in particular options, and rely heavily on the leverage effect, which is defined as the ability to commit a volume of capital that is several times higher or lower than the actual capital holdings of the fund. Hedge funds are a good way of adding an element of diversification to a ''classic'' portfolio since, in theory, their returns are decorrelated (i.e. disconnected) from the performance of the equity and bond markets.