Hedge Fund Strategies

1. Event-driven strategies ( are typically based on a corporate restructuring or acquisition that creates profit opportunities for long or short positions in common equity, preferred equity, or debt of a specific corporation. Event-driven funds are typically long-biased)

2. Relative value strategies (involve buying a security and selling short a related security, with the goal of profiting when a perceived pricing discrepancy between the two is resolved)

3. Macro strategies are based on global economic trends and events and may involve long or short positions in equities, fixed income, currencies, or commodities. Managed futures funds may focus on trading commodity futures (these funds are known as commodity trading advisers, or CTAs) or incorporate financial futures.

4. Equity hedge fund strategies seek to profit from long or short positions in publicly traded equities and derivatives with equities as their underlying assets.

Backfill bias refers to the effect on historical index returns of adding fund returns for prior years to index returns when a fund is added to an index

A Hedge Fund that invests in other hedge funds

Methods for exiting investments in portfolio companies include trade sale (sell to a competitor or another strategic buyer), IPO (sell some or all shares to investors), recapitalization (issue portfolio company debt), secondary sale (sell to another private equity firm or other investors), or write-off/liquidation.

Infrastructure investments may be classified as greenfield (assets to be built) or brownfield (existing assets)

futures price ≈ spot price × (1 + risk-free rate) + storage costs − convenience yield