Hedge funds have historically been very secretive.
They still mainly fall under Regulation D and private-placement laws, but their reporting requirements have been slightly expanded after the Dodd-Frank Act in 2010. Now, they are a little more transparent, but not fully.
Up until the Dodd-Frank Act, it was basically impossible to know what hedge funds were investing in and who was involved. Hedge fund managers and their investment banks were under no obligation to report the holdings, and they generally avoided leaking any information about their market positions for fear of damaging their advantages.
Since the Dodd-Frank Act, some fund managers, but not all, are required to report their trades. It depends on the type of fund, its total size, their vetting process for investors, and the type of investments they hold.
A Hedge Fund utilizes a wide variety of investment instruments and follows a unique investment strategy. In fact, unlike mutual funds, hedge funds do not have to stick to one strategy.
They are free to change their investment strategies, and they do not always have to disclose or make contractual agreements regarding their management strategies before they take action or take on new investors. Despite the meaning of the word “hedge,” these funds are more likely to seek returns speculatively.
Nevertheless, since the strategies being used will most likely represent alternatives to the rest of a portfolio, they do constitute a hedge in many ways.