Hedge Fund Strategies CFA Flashcards - Medical Study Cards
Master Hedge Fund Strategies with Oncourse flashcards. These spaced repetition flashcards are designed for medical students preparing for NEET PG, USMLE Step 1, USMLE Step 2, MBBS exams, and other medical licensing examinations.
Hedge Fund Strategies Flashcard Deck - 10 Cards
Flashcard 21: What is a global macro HF strategy?
Answer: - targets inflation, currency exchange rates, yield curves, central bank policies and general country health
- take positions that are directional or thematic
- uneven and volatile returns
- leverage of 600-700%
- utilize a discretionary approach more than a managed futures manager
- right-tail skewed returns during times of market stress
Flashcard 22: HF strategies with high sharpe ratios:
Answer: - systematic futures
- distressed securities
- fixed-income arbitrage
- global macro
- equity market neutral
Flashcard 23: What is the distressed securities HF strategy?
Answer: - take positions in distressed companies
- typically 2-year lock ups
- somewhat greater returns, with larger variability of outcomes
- low leverage
- high illiquidity
Flashcard 24: What are opportunistic HF strategies?
Answer: - top-down approach often spanning multiple asset classes & vary with market conditions
- returns impacted by market cycles, global developments and international interactions
- can use technical analysis or fundamental analysis
- can use a systematic and discretionary
- subtypes: global macro, managed futures
Flashcard 25: HF strategies with the highest max drawdowns:
Answer: - long/short equity
- event driven (distressed securities)
- relative value (convertible arbitrage)
Flashcard 26: HF strategies with lowest performance:
Answer: - FofFs
- multi-strategy
Flashcard 27: What is multi-class trading?
Answer: an equity market neutral strategy going long/short relatively mispriced share classes of the same firm
Flashcard 28: What are equity related HF strategies?
Answer: - focus on stocks
- equity risk is primary source of risk
- subtypes: long/short equity, dedicated short bias, equity market neutral
Flashcard 29: What is a long/short equity HF strategy?
Answer: - fund takes long positions in stocks they think will rise and short positions in stocks they think will fall
- do not seek to eliminate market exposure entirely
- typically have a 40-60% net long exposure
- try to provide some long returns with 1/2 the stdev
Flashcard 30: What is the fixed income arbitage HF strategy?
Answer: - instruments: consumer debt, bank loans, corporate bonds, sovereign bonds
- significant leverage (400-1500%)
- profit somewhat limited because fixed-income tends to be priced efficiently
- return distributions similar to returns from writing puts
- shortcoming: highly levered nature can cause modest price volatility that leads to a domino effect of margin calls and develeraging
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