Tag Archives: Hedge Fund Strategies
Common Misconceptions About The Risk Associated With Hedge Funds
One of the top reasons that investors and financial advisors don’t invest in hedge funds is that they think they are too risky. As with any investment, there is a certain amount of risk associated with hedge funds and yes, the risk is greater than that of t-bills or government bonds. However, one could argue that the investment strategies of […]
Global Macro Hedge Funds
With all of the various hedge fund strategies that managers employ, the global macro strategy is one of the broadest yet most detailed approaches used to garner sizable returns. The global macro manager usually uses leverage to make bets on price movements in any market of the world, hence the term “global.” The term “macro” refers to the macroeconomic principles used by […]
Hedge Fund Risk
The term “hedge fund” was originally coined due the fact that managers would try to hedge the funds against risk in the market by taking both long and short positions. However, risk is almost impossible to avoid in today’s volatile economy, though hedge fund managers do try to use various risk control tactics. There are so many different strategies employed […]
Hedge Fund Risk Management
When trying to maximize absolute returns, the importance of assessing and mitigating risk shouldn’t be underestimated. Some memorable examples like LTCM and Tiger Fund not only show how heavy losses can be for some participants of the hedge fund industry, but also reinforce the perception that a good record of high absolute returns can mean absolutely nothing in an environment […]
Bear Stearns – The domino effect that began with the hedge fund collapse
When most people think of Bear Stearns, they think of its recent collapse and the resulting purchase by JPMorgan Chase. However, the demise of Bear Stearns can really be traced back to two failed hedge funds during the summer of 2007 which created a domino effect on the entirety of the company. Let’s take a look back. Few hedge fund […]
Venture Capital Funds
According to Wikipedia, a venture capital fund is a pooled investment vehicle (often in the form of a limited partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of […]
The History of Hedge Funds
In 1949, Alfred Winslow Jones devised and implemented an investment strategy that would forever brand him as “the father of the hedge fund industry.” While working for Fortune Magazine and investigating financial strategies, Jones decided to launch his own fund and raised a total of $100,000, $40,000 of which was his own money. Jones employed two strategies still used heavily […]
How Do Hedge Funds Work?
There is no specific formula for how hedge funds work because different hedge funds employ a multitude of different strategies. However, there are some common characteristics that are present in most hedge funds. All hedge funds start with a hedge fund manager. This manager brings a specific strategy or investment philosophy to the table. Maybe he chooses to use leverage, short-selling, or derivatives. […]
What is an asset-based lending hedge fund?
Asset-based lending is a strategy employed by some hedge funds that has been gaining popularity in recent years. Asset-based lending is where a company (the hedge fund) loans another company a set amount of money, and that loan is backed by collateral (an asset). Let’s say a builder is in the process of constructing a tower and funds run dry. […]
Hedge Fund Strategies
Aggressive Growth: Invests in equities expected to experience acceleration in growth of earnings per share. Generally high P/E ratios, low or no dividends; often smaller and micro cap stocks which are expected to experience rapid growth. Includes sector specialist funds such as technology, banking, or biotechnology. Hedges by shorting equities where earnings disappointment is expected or by shorting stock indexes. […]
What is a Hedge Fund?
A hedge fund is a private investment fund open only to sophisticated investors. Depending on the type of fund, the investor may need to fulfill the requirement of “accredited investor” or “qualified client.” In most states, hedge funds are not required to register with the Securities and Exchange Commission and are therefore often regarded as “secretive” or “unregulated.” In actuality, there have […]
