Archive | October 2013

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Fund of Hedge Funds, Manager Selection, and Due Diligence

One of the main reasons that more and more institutional investors, particularly endowments and foundations, include hedge funds in their portfolios is the expected diversification benefit, given the existing array of investment opportunities. In the U.S., these institutions are still increasing their strategic allocation to hedge funds, despite the fact that hedge funds as a […]

An Event-Driven Strategy: Merger Arbitrage

Event-driven strategy seeks to invest in opportunities associated with corporate transactions such as consolidations, acquisitions, recapitalizations, bankruptcies, and liquidations. Merger arbitrage event-driven managers employ strategies that can capitalize on valuation inconsistencies in the market before or after mergers and acquisitions deals, and take positions based on the predicted movement of the underlying securities. Mergers can […]

A Relative Value Strategy: Convertible Arbitrage

Hedge funds deploying relative value strategies seek to take advantage of “discrepancies” in price between securities or the overall market. Within the relative value category, there are sub-strategies, and convertible arbitrage is an important form of relative value strategy where hedge fund managers exploit pricing inefficiencies between convertible securities and the underlying stocks. Under normal […]

A Global Macro Strategy: Managed Futures

  Hedge funds utilizing a global macro strategy take positions in equity, fixed income, or currency markets in anticipation of global macroeconomic events to generate risk-adjusted returns. Global macro fund managers rely on the “big picture” or trends to identify investment opportunities and profit from anticipated price movements. There are sub-strategies within global macro strategies, […]

Hedge Fund Landscape

The first hedge fund emerged in 1949 when sociologist Alfred Winslow Jones and his four friends formed an investment partnership. The first reference to a hedge fund appeared in a 1966 Fortune article by Carol Loomis. Ms. Loomis wrote the story of Alfred Jones in The Jones Nobody Keeps Up With, little did she know […]