For instance, Fixed-income funds primarily invest in fixed-income securities, which are usually issued by corporations, banks, and governments. Hedge funds likely exhibit different exposures to the changes in risk factors based on their investment strategies. Hedge fund managers usually announce risk characteristics or investment strategies of their funds to investors. Since hedge funds can go both long and short and/or can invest in most types of financial instruments, risk levels can vary from neutral to extremely high. Hedge funds adopt diverse investment strategies and provide investors with options to select hedge funds that best fit to their risk preference.
Therefore, it is natural that such exposure is dynamic and time-varying. Highly skilled managers can actively respond to changes in market conditions and quickly adjust their portfolios and exposures to changes in various risk factors.
Quant hedge fund full#
Hedge fund managers are given almost full discretion in determining investment strategies, portfolio composition, and level of leverage. It is well known that hedge funds are less regulated relative to traditional mutual funds enabling fund managers to take long/short positions in almost any financial instruments and use extremely high levels of leverage. According to Eureka hedge India Hedge Fund Index, which tracks hedge funds in India, the category generated 5.07 per cent return in 2015 compared to 38.84 per cent logged in 2014. The minimum ticket size for investors putting money in these hedge funds is Rs 1 crore. There are others such as Singlar India Opportunities Trust, Motilal Oswal’s offshore hedge fund and India Zen Fund.
Some examples of hedge funds include names like Munoth Hedge Fund, Forefront Alternative Investment Trust, Quant First Alternative Investment Trust and IIFL Opportunities Fund. Merger arbitrage funds and distressed asset funds fall into this category.Īs of June 30, 2014, there were 158 alternative investment funds (pooled-in investment vehicles for private equity, real estate, and hedge funds). Here, the goal of the fund manager is to minimize market risks by investing in long/short equity funds, convertible bonds, arbitrage funds, and fixed income products.Īnother type includes event-driven funds that invest in stocks to take advantage of price movements generated by corporate events. Then there are funds that work on market-neutral strategies.
One such strategy is global macros, where the fund takes long and short positions in large financial markets based on the views influenced by economic trends. There are many strategies a hedge fund may use to generate returns. They are not required to be registered with the securities markets regulator and are not subject to the reporting requirements, including periodic disclosure of NAVs. These funds work either as private investment partnerships or offshore investment corporations. Hedge fund investors typically include high net worth individuals (HNIs) and families, endowments and pension funds, insurance companies, and banks. As the name suggests, the fund tries to hedge risks to investor’s capital against market volatility by employing alternative investment approaches. Put simply, a hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities and derivative products to generate returns at reduced risk. ~ Barack Obamaįirst of all we should ask what is a hedge fund ?Ī Hedge fund is a private investment partnership and funds pool that uses varied and complex proprietary strategies and invests or trades in complex products, including listed and unlisted derivatives. I think they’re just one more financial tool. I don’t think that hedge funds are bad per se.
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