Hedge funds: Funds that use hedging trading methods are called hedge funds, also known as hedge funds or hedging funds. It refers to financial funds that combine financial derivatives such as financial futures and financial options with financial instruments for the purpose of profit. It is a form of investment fund, meaning "risk-hedged fund".

Strategy method:

1. Arbitrage strategy: the most traditional hedging strategy

2. Index enhanced portfolio + index futures short rolling year Alpha distribution, based on 90 Only statistical arbitrage performance of margin financing and securities lending target portfolios

3. Alpha strategy: converting relative returns into absolute returns

4. Neutral strategy: starting from the dimension of eliminating Beta

Investment strategies

Currently, there are more than 20 commonly used investment strategies in hedge funds, and their techniques can be divided into the following five types:

Long and short positions

That is, buying and selling stocks at the same time, which can be a net long position or a net short position

Market Neutral

That is, buying stocks with a low stock price and selling stocks with a high stock price at the same time Stocks

Convertible Arbitrage

That is, buying low-priced convertible bonds while shorting the underlying stocks, and vice versa

Global Macro

That is, analyzing the economic and financial systems of various places from top to bottom, and buying and selling according to political and economic events and main trends

Managed futures

That is, holding the length of various derivatives warehouse. The two most classic investment strategies of hedge funds are "shortselling" and "leverage."

Short-selling

That is, buying stocks as a short-term investment means selling the stocks purchased in the short term and then buying them back when their stock prices fall to earn the difference. (arbitrage). Short-term investors almost always borrow other people's stocks to short-term their positions ("long position" refers to buying stocks themselves as long-term investments). A short position strategy is most effective in a bear market. If the stock market rises instead of falling, and short-term investors bet on the wrong direction of the stock market, they will have to spend a lot of money to buy back the appreciated stocks and suffer losses. The short-term investment strategy is not adopted by ordinary investors due to its high risk.

Leverage

"Leverage" has multiple meanings in the financial world. The most basic meaning of the English word is "leverage". Usually it refers to Use credit to expand your capital base. Credit is the lifeblood and fuel of finance. Entering Wall Street (the financing market) through "loan leverage" creates a "symbiosis" relationship with hedge funds. In high-stakes financial activities, "lending" has become an opportunity for Wall Street to provide chips to big players. Hedge funds borrow capital from big banks, and Wall Street provides services such as buying and selling bonds and back offices. In other words, hedge funds armed with bank loans in turn threw large amounts of money back to Wall Street in the form of commissions.

Industry Strategy

There are currently 14 hedge funds in total using this strategy (including equity investment funds). Industry strategy funds refer to more than 70% of the funds under management. Funds are invested in stocks in a specific industry in order to follow the overall growth of the industry and obtain excess returns. Since the stock fluctuations of a single industry will be much more violent than the fluctuations of the Shanghai Composite Index, the risks will be greater, and of course the returns will also be amplified. According to the performance of BlackRock's seven industry strategy investment funds, industry strategies can provide investors with better performance Other strategic funds have higher risk returns, provided that the professionalism and operating methods of the management fund company are more advanced than others. At present, my country's industry strategy funds mainly focus on TMT, pharmaceuticals, and consumption. Among them, pharmaceutical industry strategy hedge funds occupy the mainstream, and consumer industry strategy funds occupy the mainstream public fund investment strategies. There are also certain differences in the returns obtained from public offerings and private placements. This difference stems from the degree of constraints in the operation of public offerings and private placement funds.