Hedge Funds

Question 1

Long Short Equity

Equity strategies

Answer 1

• Buy equities expected to rise in value (underv) and sell short equities expected to decline in value (over)
• reliance on fundamental research : top down & bottom up
• same return with half volatility compared to long only
• add alpha with market timing, stock picking
• • : liquid, diverse, reduce volatility

Question 2

Dedicated short bias

Answer 2

short side exposure, may be moderated with cash
bottom up approach
some market timing, beta tilt
handle best in limited partnership
+: liquid, negatively correlated alpha

Question 3

Equity Market Neutral

Answer 3

Take opposite (short & long) positions in similar or related equities having divergent valuation while attemptiiong to maintain a near net zero portfolio exposure to the market
must apply leverage to achieve meaningful return
more appropriate in periods of non-trending or declining markets

Question 4

Global macro strategies

Answer 4

key source of returns = correctky discerning and capitalizing on trends in global markets
top down
highly liquid
use both fundamental and technical analysis to value markets
wide range of asset classes
use discretionary and systematic modes of implementation