Discuss the ways hedge fund strategies can be grouped
The idea
Hedge funds are grouped by what drives their returns. Equity strategies trade shares and differ in net exposure: long/short equity, dedicated short bias and equity market neutral. Event-driven strategies profit from corporate events, such as merger arbitrage and distressed securities. Relative value strategies exploit pricing gaps between related securities, such as fixed-income arbitrage and convertible bond arbitrage. Opportunistic strategies take top-down views across asset classes: global macro and managed futures. Specialist strategies need niche skills, such as volatility trading and reinsurance or life settlements. Multi-manager approaches, fund-of-funds and multi-strategy funds, combine several. Liquidity, leverage and directionality give further dimensions. The trap is classifying a fund by the instruments it trades rather than by the source of its return.
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- Discuss equity-related hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
- Discuss event-driven hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
- Discuss relative value hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
- Discuss opportunistic hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
- Discuss specialist hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
- Discuss multi-manager hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio
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