What is the primary objective of a hedge fund?

The primary objective of a hedge fund is to employ various strategies to earn an active return for its investors. Hedge funds are investment vehicles that use a wide range of tactics, which may include long and short positions, leverage, derivatives, and arbitrage, among others. These strategies are designed to achieve high returns, often with a focus on absolute performance rather than comparing against a benchmark. This active management approach allows hedge funds to capitalize on market opportunities and navigate market volatility, aiming to deliver superior investment performance for their clients.

In contrast, the other choices do not accurately capture the essence of a hedge fund's purpose. Providing secure investments for retirees is more aligned with traditional investment vehicles focused on stability, such as mutual funds or fixed-income securities. Selling stocks to maximize company profits pertains more to the operational goals of a corporation rather than an investment fund. Managing government securities typically refers to funds that exclusively deal with fixed-income investments, again limiting the broader and more diverse strategies typical of hedge funds.