What is commonly associated with the use of hedge funds?

Hedge funds are known for their diverse investment strategies that incorporate a broad range of financial instruments. This flexibility allows hedge fund managers to engage in various activities, such as long and short positions, leverage, derivatives trading, and arbitrage. By employing a mix of these strategies, hedge funds aim to generate returns that are uncorrelated with traditional market movements and to hedge against potential risks.

The association of hedge funds with a variety of financial instruments is key to their appeal, as it enables managers to capitalize on different market conditions and opportunities. This characteristic distinguishes hedge funds from more conventional fund types, which may have stricter investment mandates and limitations.

The other options, such as focusing exclusively on domestic stocks, solely on real estate, or engaging in long-term holding without active management, do not accurately capture the diverse and opportunistic nature of hedge fund strategies. Hedge funds are defined by their ability and willingness to adapt to changing market conditions and utilize a wide range of assets and strategies for investment.