Hedge Fund Styles

While hedge funds are mostly traditional assets managed with non-traditional methods, there are wide varieties of characteristically unique strategies and styles that a manager can employ. We focus on five of the main classifications that can describe strategies: Directional, Event-Driven, Relative Value, Multi-Strategy, and Managed Futures.

The Beta in Hedge Funds and What Hedge Funds Have Produced

Hedge funds have risen in popularity over recent decades, in part because of the perception of a low correlation with the markets. Yet, they are often more closely correlated with markets than originally assumed. We explore the many forms that beta may take in a hedge fund.

Portable Alpha

When investing in a hedge fund, we accept higher fees with the expectation for superior returns in the form of alpha. A Portable Alpha strategy allows us to separate the alpha from the beta. Depending on how the strategy is implemented, we can effectively hedge downside risk.

Selecting and Sizing Investments

When investing in hedge funds, manager selection and allocation are more difficult than it may seem, as the quality of management is critical. We examine key principles of best practices that should be considered in the process of investment selection and sizing.

Forming A Portfolio of Hedge Funds and Terminating A Hedge Fund Account

Once we have decided to add hedge funds to our overall portfolio, we must quantitatively analyze our choices and constantly manage investments. We examine the relevant aspects of hedge fund analysis and the process of terminating such an investment.

Dealing With Risk

Historically, volatility has been the matrix used to measure risk. With hedge funds, however, there are several additional factors to consider, including diversification, liquidity, tracking and benchmark errors, and tail risk.