Hedge funds are funds that can include short and long positions, trade options or bonds, purchase and sell undervalued securities, and use arbitrage and invest in nearly every opportunity in any market with predictable impressive gains at minimized risks. The basic and main objective of many hedge funds is to lessen volatility and risk while trying to maintain capital and provide positive returns within all market conditions. Hedge fund strategies differ hugely because of the current volatility and expectation of corrections in the overheated stock markets. Notably, there are around 14 different investment strategies that are used by hedge funds with each of them providing varying degrees of return and risk. As a result, understanding the differences between these hedge fund strategies is critical because they provide different investment returns ("What is a Hedge Fund?" n.d.). Nonetheless, certain strategies that are not connected to equity markets are able to provide constant returns with extremely low risk of loss whereas others are increasingly volatile than mutual funds. On the contrary, most of these strategies benefit from being non-connected to the direction of equity markets.
Similarities in Hedge Fund Strategies:
Hedge fund strategies are categorized in various strategy classes such as event drive, equity base, tactical, and relative value. The equity base hedge is generally known as long/short equity and it's considered as the simplest strategy to understand though it has several sub-strategies (Barufaldi, n.d.). Event-driven strategies are hedge funds in which liquidations don't have an ordinary buyer base with returns anticipated to be low (Mirandon, n.d.). These funds seek to generate profitable timely investments in securities that are currently impacted by certain events. The tactical strategies for hedge funds are those that speculate on the market's direction on prices of commodities, currencies, equities and/or bonds (Chriss, 1998). Relative value strategy basically entails the attractiveness evaluated on the basis of liquidity, risk, and return relative to each other.
The sub-strategies in each of...
In the first-round survey, a majority of investors cited diversification as their main objective in allocating to hedge funds. Among the second-round interviewees who were planning to increase their target allocations by 10% or more, half named diversification as the motivating factor. Among the approximately one in ten who were planning to decrease allocations by at least 10%, concern with a lack of transparency was the most frequently cited
2.3: Theme I: This study's first theme defines hedge funds and presents a synopsis of their history. 2.4: Theme 2: Ways hedge funds compare to mutual funds are noted in this section, this study's second theme. 2.5: Theme 3: segment denotes techniques hedge funds utilise in investing. 2.6: Theme 4: A number of ways rising and falling markets impact hedge funds, this section's theme links to the thesis statement for this thesis/Capstone. 2.7: Analysis:
" (Grassi, 2007) III. HEDGE FUNDS REBOUND FROM SUBPRIME SUMMER in SEPTEMBER It is related in an October 10, 2007 report that Hedge funds "rebounded nicely from the summer of subprime in September, posting one of their months in a decade." (FINalternatives, 2007) Hedge funds rose 3.27% in September in what is stated to be "the largest increase in four years, and the second largest in eight." (FINalternatives, 2007) the gains are
The investors have responsibility to invest based on the social needs. The retail investor, can for example is thus a person who buys socially responsible unit trusts or mutual funds. Actually the investment that is being touted as responsible investment is the work of socially beneficial institution like pension funds, and some charitable foundations. Normally the institutional investors do not enter the socially responsible investment scenario. Of late however
Unfortunately, determining which fund to go with for a retail investor is difficult, as there are many unscrupulous fund managers who might seek to take advantage of the fact that they are playing with other people's money and making (at least) the management fee. This can lead even scrupulous hedge fund managers to take unnecessary risks. The danger of hedge funds being mismanaged truly cannot be overstated. For example, Bernie
Risk Management in Hedge Funds A research of how dissimilar hedge fund managers identify and achieve risk The most vital lesson in expressions of Hedge Fund Management comes from the inadequate name of this kind of alternative investment that is an alternative: The notion that all methodical risks are differentiated away is not really applicable here, with the Hedge Fund returns, in realism, representing a mixture of superior administration of market
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now