What are the different hedge fund classifications?
Hedge funds are generally categorised by the instruments or markets they invest in and the investment strategies they adopt. But different persons may have different classifications for hedge funds. The followings are some examples of hedge fund classes. Long/short equity: These funds carry long and/or short positions in equities. Typically, their objectives are not to be market neutral. They can shift from net long (majority of positions are long) to net short (majority of positions are short), depending on the managers’ views on the price movements of their investments. Equity market neutral: This strategy is designed to exploit equity market inefficiencies and usually involves simultaneously taking long and short positions in under- and over-valued equities, while maintaining market neutral. Convertible arbitrage: This strategy attempts to profit from price discrepancies between convertible bonds and their underlying stocks. A typical investment is buying an undervalued convertible
