What’s the difference between alternative asset managers and hedge fund managers?
Alternative asset managers seek to create value over the long-term (typically 3-7 years), while hedge funds typically have a much shorter time horizon. Alternative asset managers typically buy and own whole companies and help them realize earnings growth over time. Alternative asset managers succeed only when the companies they own succeed. Hedge funds are pools of capital that usually invest in stocks, bonds, or commodities. Typically, they do not purchase a controlling interest in a company (although some may do so). Rather, they try to capitalize on short-term gains, using complicated trading strategies involving options and other derivative financial instruments. In some cases, hedge funds bet against the shares of companies they don’t own, hoping to profit from a falling price. The typical holding period for a hedge fund investment is weeks or months, not years.
