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Hedge Fund Strategies

In the spirit of sharing knowledge, we share some background material on various hedge fund strategies that this site covers. The material is designed to share knowledge and will continuously update performance numbers and peculiar characteristics of each strategy. This page will gradually evolve and change over time.

CTA/Managed Futures – A short introduction to the strategy, covering the regulatory environment, manager development, and how the strategy fulfills certain views regarding skew and correlation to equities. Managed Futures is synonymous with Trend Following, but also with managers execution of directional strategies in Global Macro markets.

Market Neutral – Highlights the correlation and beta to the equity market, performance, and a few ways that market neutrality can be defined. Equity Market Neutral strategies is a popular strategy that seeks to extract pure security selection value via a relative value approach. The strategy balances long and short position to create a portfolio unexposed to market directions.

Equity Long/Short – Perhaps the most common hedge fund strategy in existence. Long/Short Equity funds tend to be long-biased, i.e. they partly depend on the overall direction of the equity market but also on the stock-picking capabilities of the manager. It has sometimes been described as “double alpha” as the manager should, in theory, be able to earn returns on both the long and short views. That is however seldom true and like a lot of other liquid strategies, most of the returns originated from the long side. Over the last decade, short-selling has been a particularly painful exercise.

Pictures: Photo by Rubén Bagüés on Unsplash , Photo by Tyler Milligan on Unsplash