What is Hedging?

When it comes to investing, risk is unavoidable. As the old saying goes, “there’s no free lunch in finance.”

Every investment carries some level of uncertainty, and the higher the perceived risk, the higher the return investors typically expect in compensation.

Risks can come in many forms, market risk, credit risk, interest rate risk, currency risk, and more. The real question for investors is not whether risk exists, but how best to manage it.