Types of investment strategies

Hedge funds use a vast range of different investment management strategies and pursue very different risk and return targets.

These different approaches can be categorised into styles, such as:

Equity hedged

Seek to profit by taking long and offsetting short positions in respectively undervalued and overvalued equities, adopting consistent or variable net long or short exposure.

Relative value

Exploit perceived mispricings and changing price relationships between similar or related securities (convertible bond arbitrage, fixed income arbitrage, statistical arbitrage).

Event driven

Engage primarily in the purchase and short sale of securities of companies experiencing or involved in substantial corporate changes (merger arbitrage, distressed securities and special situations).

Global macro

Analyse shifts in macroeconomic trends to capitalise on upward and downward directional opportunities across the spectrum of markets, asset classes and financial instruments.

Managed futures

These strategies trade in futures, options and other derivatives in financial assets and physical commodities on highly regulated exchanges around the world (systematic long-term trend-following, discretionary and short-term active trading strategies).

Funds of hedge funds

Invest in a number of hedge fund managers either in a single style or diversified across styles and markets.

New alternative investments

New strategies are continuously being developed, introducing new applications of existing styles or opening new markets. Developments over the years include hedge funds trading in: 

• commodities 
• niche equities (Asia, emerging markets or sector) 
• credit opportunities 
• insurance-linked securities and alternative risk transfer

Please note that some of the products and investment strategies described here may not be offered in your jurisdiction or may significantly differ from those offered in your jurisdiction.