List of hedge fund strategies

Question 1

Directional bets

Answer 1

Bet on the direction of financial or economic variables like the s&p to increase or decrease,

often based on fundamentals
not market neutral

Question 2

non-directional strategies

Answer 2

exploit temporary misalignments in security valuations buy one security and sell another (pairs trading)

Often quantitative
strives to be market neutral

Question 3

convertible arbitrage

Answer 3

hedged investing in convertible securities, typically long convertible bonds and short stock

Question 4

dedicated short bias

Answer 4

net short position, usually in equities, as opposed to pure short exposure

Question 5

emerging markets

Answer 5

goals is to exploit market inefficiencies in emerging markets. typically long only because short selling is not feasible in many of these markets

Question 6

equity market neutral

Answer 6

commonly uses long/short hedges. typically controls for industry sector size and other exposures, and establishes market neutral positions designed to exploit some market inefficiency. commonly involves leverage

Question 7

Event driven

Answer 7

attempts to profit from situations such as mergers, acquisitions, restructuring, bankruptcy or reorganization

Question 8

fixed income arbitrage

Answer 8

attempts to profit from price anomalies in related interest rate securities, includes interest rate swap arbitrage, U.S. versus non-U.S. government bond arbitrage, yield curve arbitrage and mortgage backed arbitrage

Question 9

global macro

Answer 9

involves long and short positions in capital or derivative markets across the world. portfolio positions reflect views on broad market conditions and major economic trends

Question 10

long/short equity hedge

Answer 10

equity oriented positions on either side of the market (i.e., long or short), depending on outlook not meant to be market neutral. may establish a concentrated focus regionally (e.g., US or Europe) or on a specific sector. derivatives may be used to hedge positions.

Question 11

managed futures

Answer 11

uses financial, currency, or commodity futuress. may make use of technical trading rules or a less structured judgmental approach

Question 12

multistrategy

Answer 12

opportunistic choice of strategy depending on outlook

Question 13

fund of funds

Answer 13

fund allocates its cash to several other hedge funds to be managed