Hedge funds | ECO 406 Business Cycles & Growth | Ashford University
Hedge funds have both helped and hindered economic growth in the U.S., depending on which perspective one views them from. On one hand, these types of investments have enabled wealthy investors to increase their portfolios quickly and efficiently while also providing greater access to capital markets for those who otherwise may not be able to participate such as smaller businesses or startups seeking funding. However, hedge funds can also create instability within financial markets due its speculative nature often pushing up prices beyond what could be sustained given ordinary market conditions resulting in financial crises.
In conclusion, hedge funds are powerful tools that can enable effective portfolio diversification while providing increased access to capital markets when needed if used properly; however they can also result in extreme volatility within financial systems destabilizing economies if mismanaged leading towards significant economic downturns at times.