Wondering which hedge fund strategies you should pay attention to? Hedge funds play a major role in the investment world, as they have billions of dollars in assets under management that they invest in many companies, supporting their growth in exchange for returns they achieve from investments. Currently there are over 8,000 hedge funds in existence, with hundreds being launched every year. However, it is hard for a hedge fund to stay afloat, because, since the investments are most often based on speculation, a hedge fund requires a detailed analysis of investment instruments.
Hedge funds have some particularities that make them different from other money managing firms. An investor who wants to get involved in a hedge fund, must have net assets of at least $1 million, and a certain amount of annual net income. Due to this strict eligibility for investors, hedge funds are–for the most part–not regulated in the U.S., which offers them some flexibility and freedom. To learn some more details about hedge funds, see us answer the question “what is a hedge fund“?
While the number of hedge funds with AUM totals in excess of $1 billion total somewhere around only the 500 mark, hedge fund managers are usually wealthy people, with many (but not all) millionaires, which makes this field inherently attractive for piggyback investors searching for strategies.
Generally speaking, hedge funds have many aspects which ensure their proper functioning. However, there is another thing, which is the most important for a hedge fund activity: their strategy. It is applied for finding opportunities that yield high returns with as little risk as possible. Hedge managers often claim that they have developed their own strategy, which stands behind their success.
Even though each hedge fund has something particular in its strategy, which has been introduced and developed by its managers, there are some basic strategies, that are used by all hedge funds. We have compiled a list of several hedge fund strategies that show how money managers can bring in the big bucks.
Let’s take a look on the following pages: