Portfolio Risk & Return

Hedge

A holding chosen because it tends to rise, or keep its value, when the rest of the portfolio falls — a partial offset against a specific risk. Long-term Treasury bonds have often played this role against stocks, rising in many sell-offs as investors seek safety; gold and certain volatility-linked funds are other examples. A hedge is a form of insurance, and like insurance it usually costs something: a lower expected return in normal times. It can also fail when it is needed most — in 2022, rising interest rates sent stocks and long-term bonds down together.

Educational information, not investment advice. See it applied across the screener →