Fed Funds Futures – A financial instrument used to manage and hedge against risk in the Federal funds market. Essentially, it is a contract that allows investors to buy or sell a specific quantity of Fed Funds at an agreed upon price at some point in the future. These futures are popular as they allow investors to adjust their exposure to the Federal Funds market without having to own any physical assets. They can also be used to hedge against shifts in interest rates, currency values, and other economic changes.