Hedge Funds offer flexible investment strategies like no other
Hedge funds are a broad term for a collection of investment vehicles that employ varying strategies that allow investors to protect their investments against declines in the equity market.
Common types of Hedge Fund strategies
Long/short equity strategies
Global macro strategies
Quantitative funds
Fixed income/credit funds
Commodity funds
Merger arbitrage strategies
Hedge Fund managers employ several strategies to keep their investors relatively safe from uncertainty in the equity markets, such as taking short positions on stocks to protect against volatility in major market indices, while maintaining some long positions for capital appreciation.
Hedge Funds have shown resiliency through the volatility caused by COVID-19 and are attracting significant investor attention
Hedge Funds are pooled and actively managed funds that are highly flexible in terms of taking long or short positions, using derivatives strategically or for hedging, and leverage for enhancing returns.
They can invest in one sector or the market as a whole including commodities, debt, and derivatives.
Investments in Hedge Funds have been steadily growing, with total assets under managements rising from $1.0 trillion in 2004 to $4.0 trillion 2020, according to PwC.
The risks and rewards of Hedge Fund investments
Given the wide range of types of Hedge Fund strategies, it is important to understand the associated risks and rewards they offer.
Risks
Hedge Funds may not be as liquid as some investors would prefer as redemptions are typically only allowed quarterly and may even be restricted in adverse environments. In addition, using leverage could lead to losses.
Rewards
Hedge Funds are more flexible than many other types of investments and can offer lower volatility and higher returns to investors by using tools such as leverage and derivatives.
Stay ahead of the curve
Hedge funds offer accredited investors access to a range of strategies to reduce portfolio volatility and pursue enhanced returns.
Finding alternatives with PitchBoard
Finding alternatives with PitchBoard
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