hedging

1. The practice by which a business or investor limits risk by taking positions that tend to offset each other. For example, a business stands to lose money if the price of a commodity it holds declines, but it can offset this risk by agreeing to sell a specified amount of the commodity at a set price at some point in the future.

Hedge funds, which are investment funds usually open only to the very wealthy, grew in the 1990s. The near failure of one such fund in 1998, Long-Term Capital Management, sent shock waves through Wall Street.

Example Sentences

Wary of further disruptions, the Taliban government is now hedging its bets with Iran, Central Asia -- and beyond.

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We see a growing chance that people are interested in hedging against dollar risk.

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Many believe the message could not be clearer: Bangladesh, once India's most dependable neighbour, is hedging hard.

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That’s why a little weakness can be counted upon to spark interest in hedging a stock portfolio.

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For hedging purposes, it’s better when stocks move in the opposite direction to stocks.

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Related Words

• prevarication