Types of Hedge Funds
From Financial Literacy Wiki
Below is a list of types of hedge funds:
Event Driven Funds
These funds take equity stakes in securities of companies in financial trouble, in the hope of making capital gains when the companies comes out of their financial crisis. They also take positions in takeover situations by buying shares of firms that is being taken over and shorting shares that are buying the firm they want to take over.
Market Neutral Funds
These funds are called arbitrage funds that seeks to exploit misaligned pricing of securities.
Macro Funds
These funds takes favorable positions on interest rates, stocks, currencies and commodities on the basis of forecasts on macroeconomic variables like inflation, underlying economy, policy changes (monetary and fiscal).
Short Selling Funds
These funds take advantage of overpriced securities by taking short positions on these securities.
Long Only Funds
These funds uses leverage to invest in underpriced securities.
Sector Funds
These funds take long or short positions in specific industry.
Global Funds
These funds invest globally, which includes emerging markets that are risky but they are not limited in the investment strategies they can adopt.
Fund-of-Funds
It is an umbrella funds that invest in a portfolio of hedge funds in order to diversify risk.
