A limited partnership of private investors, hedge funds are managed by investment professionals to maximize returns. Depending on the specific strategies and goals adopted by these hedge fund managers, a hedge fund might fall into one or more general categories.
When the typical investor thinks about a hedge fund, a global macro hedge fund is generally what springs to mind. These hedge funds take positions based on predicted outcomes of extremely significant (or “global macro”) events such as economic collapses or political upheavals. Another common type of hedge fund includes the relative value hedge fund, which takes advantage of the pricing anomalies among similar securities that often arise during major structural and ownership changes such as mergers and acquisitions. Beyond investment strategy, hedge funds can set themselves apart in terms of objectives and focus. For example, an activist hedge fund invests in specific companies and takes other strategic actions to engender changes that range from asset restructuring to management overhauls.
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AuthorStewart Strawbridge rode The Bruce to victory in the 111th running of the Maryland Hunt Cup in 2007 Archives
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