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Tuesday April 23 2019
Hedging Strategies
  What is a Hedge Fund?
  Key Characteristics of Hedge Funds
  Facts About the Hedge Fund Industry
  Hedging Strategies
  Popular Misconception
  Benefits of Hedge Funds
  Hedge Fund Styles
  What is a Fund of Hedge Funds?
  Synopsis of Hedge Fund Strategies
  Facts About the Hedge Fund Industry
  Hedge vs Mutual Funds

Hedging Strategies

A wide range of hedging strategies are available to hedge funds. For example:

  • selling short - selling shares without owning them, hoping to buy the shares back at a future date, at a lower price, with the expectation that the price of the shares will drop.
  • using arbitrage - seeking to exploit pricing inefficiencies between related securities - for example, can be long convertible bonds and short the underlying issuers’ equity.
  • trading options or derivatives - contracts whose values are based on the performance of any underlying financial asset, index or other investment.
  • investing in anticipation of a specific event - merger transaction, hostile takeover, spin-off, exiting of bankruptcy proceedings, etc.
  • investing in deeply discounted securities - of companies about to enter or exit financial distress or bankruptcy, often below liquidation value.
  • Many of the strategies used by hedge funds benefit from being non-correlated to the direction of equity markets 

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