understanding hedge fund trading strategiesPacific Fund 了解对冲基金的交易策略-太平洋基金.docVIP

HEDGE FUND TRADING STRATEGIES, BENCHMARKS AND DUE DILIGENCE Text of speech given by James Eldershaw to the Financial Standard Hedge Fund Workshop held in Melbourne 11 Feb 2004 and Sydney 12 Feb 2004. Today’s focus on hedge funds is from the viewpoint of an asset allocator or fund of funds manager looking to invest in a portfolio of hedge funds. To understand hedge fund trading strategies we need to look at the definition of hedge funds so that we can extricate hedge funds from the universe of investment managers. Indeed hedge funds have sometimes been given a bad name by funds which by many measures would not necessarily meet the definition of a hedge fund. There is no standard definition of a hedge fund , but most industry insiders would agree on the following key points : Non-institutional and evolutionary nature Incentive based compensation Absolute return or non traditional market correlated return Superior risk adjusted returns Let us consider the main hedge fund strategies. The following strategy names are those used by Van Global Hedge Fund Advisors as there is no universal naming convention for hedge fund strategies. Note also that there may be some overlap in the strategy definitions. Aggressive growth Distressed securities Emerging markets Income Global Macro Market Neutral - Arbitrage Market Neutral – Securities hedging Market timing Opportunistic Event driven Short selling Value Aggressive growth : The manager invests in high growth equities. May rely on fundamental analysis or technical factors such as charting and momentum. Likely to have high risks and returns and to have high correlation to the equity indices. Although such funds were very common in the infancy of the hedge fund industry their classification as hedge funds is contentious dues to the correlation to market indexes. Distressed securities : The manager invests in securities (both equities and bonds) of companies which face bankruptcy, re-organisation or a low credit rating generally.