QuantumFund and QuotaFund: Both belong to hedge funds. Among them, the leverage ratio of the former is 8 times, and the latter can reach 20 times, which means that the latter will have a higher rate of return than the former, but the investment risk is also greater than the former. According to Micropal's data, the risk fluctuation value of quantum funds is 6.54, while that of fixed funds is as high as 14.08.
Basic connotation
People call financial futures and financial options financial derivatives, and they are usually used as a means to hedge and avoid risks in financial markets. With the passage of time, in the financial market, some fund organizations use financial derivatives to adopt various profit-oriented investment strategies. These fund organizations are called hedge funds. At present, hedge funds have long lost the connotation of risk hedging. On the contrary, it is generally believed that hedge funds are actually based on the latest investment theory and extremely complex financial market operation skills, making full use of the leverage of various financial derivatives to undertake high-risk and high-yield investment models.
source and course
The English name of Hedge Fund means "hedge fund", which originated in the United States in the early 1950s. At that time, the purpose of operation was to use financial derivatives such as futures and options, as well as the operational skills of buying and selling different related stocks and hedging risks, which could avoid and resolve investment risks to a certain extent. 1949 The first Jones hedge fund with limited cooperation in the world was born. Although hedge funds appeared in the 1950s, they did not attract much attention in the next thirty years. It was not until 1980s that with the development of financial liberalization, hedge funds had broader investment opportunities and entered a stage of rapid development. In 1990s, the global inflation threat gradually decreased, financial instruments became more mature and diversified, and hedge funds entered a stage of vigorous development. According to the Economist, from 1990 to 2000, more than 3,000 new hedge funds appeared in the United States and Britain. After 2002, the yield of hedge funds has declined, but the scale of hedge funds is still not small. According to the Financial Times' report on October 22nd, 2005, the total assets of global hedge funds have reached 1. 1 trillion dollars.
In the most basic hedging operation. After the fund manager bought a stock, he also bought a put option with a certain price and time limit. The utility of put option is that when the stock price falls below the option-limited price, the holder of seller option can sell his stock at the option-limited price, thus hedging the risk of stock decline. In another hedging operation, the fund manager first chooses a certain kind of bullish industry, buys a few good stocks in this industry and sells a few bad stocks in this industry according to a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will definitely exceed other stocks in the same industry, and the gain from buying high-quality stocks will be greater than the loss from shorting inferior stocks; If the expectation is wrong, the stocks of this industry will fall instead of rising, then the stocks of poor companies will fall more than the high-quality stocks. Then the profit of short selling will be higher than the loss caused by the decline in buying high-quality stocks. Because of this mode of operation, the early hedge fund can be said to be a form of fund management based on the conservative investment strategy of hedging.
trait
After decades of evolution, hedge funds have lost the original connotation of risk hedging, and the title of hedge funds also exists in name only. Hedge fund has become synonymous with a new investment model. That is, based on the latest investment theory and extremely complicated financial market operation skills, we should make full use of the leverage of various financial derivatives and take high risks. Pursuing a high-yield investment model. Today's hedge funds have the following characteristics:
(1) Complexity of investment activities.
In recent years, increasingly complex and innovative financial derivatives such as futures, options and swaps have gradually become the main operating tools of hedge funds. These derivatives were originally designed to hedge risks, but because of their low cost. The characteristics of high risk and high return have become a powerful tool for many modern hedge funds to speculate. Hedge funds match these financial instruments with complex portfolios, invest according to market forecasts, and obtain excess profits under accurate forecasts, or use the imbalance caused by short-term midfield fluctuations to design investment strategies to obtain the price difference when the market returns to normal.
(2) The investment effect is highly leveraged.
Typical hedge funds often use bank credit leverage to expand their investment funds several times or even dozens of times on the basis of their original funds in order to maximize their returns. The high liquidity of securities assets of hedge funds makes it convenient for hedge funds to use fund assets for mortgage loans. A hedge fund with a capital of only 10 billion dollars can lend billions of dollars by repeatedly mortgaging its securities assets. The existence of this hit effect makes the net profit after deducting loan interest from a transaction far greater than the possible income from capital operation with only $6,543.8 billion. Similarly, it is precisely because of the leverage effect that hedge funds often face great risks of excessive losses in the case of improper operation.
(3) Private financing.
The organizational structure of hedge funds is generally partnership. Fund investors buy shares with funds, provide most of the funds, but do not participate in investment activities; Fund managers join in with funds and skills, and are responsible for the investment decisions of funds. Because hedge funds require a high degree of concealment and operational flexibility, the partners of hedge funds in the United States are generally controlled below 100, and the contribution of each partner is above 100 million US dollars. Because hedge funds are mostly private, they evade the strict requirements of American law on information disclosure of public offering funds. Due to the high risk and complex investment mechanism of hedge funds, many western countries prohibit them from publicly recruiting funds to protect the interests of ordinary investors. In order to avoid the high taxes in the United States and the supervision of the US Securities and Exchange Commission, hedge funds operating in the US market generally register offshore in some areas with low taxes and loose regulations, such as the Bahamas and Bermuda, and are limited to raising funds from investors outside the United States.
(4) The concealment and flexibility of operation.
Hedge funds and securities investment funds for ordinary investors not only have great differences in fund investors, fund raising methods, information disclosure requirements, supervision degree, but also have many differences in fairness and flexibility of investment activities. Securities investment funds generally have a clear definition of portfolio. In other words, there is a definite scheme in the choice and proportion of investment tools. For example, a balanced fund means that stocks and bonds are roughly equally divided in the fund portfolio, while growth funds refers to the investment focused on high-growth stocks. At the same time, * * * mutual funds are not allowed to use credit funds for investment, while hedge funds have no restrictions and definitions in these aspects. They can use all operational financial instruments and combinations to maximize the use of credit funds in order to obtain excess returns higher than the average market profit. Hedge funds play an important role in speculation in modern international financial markets because of their high concealment, operational flexibility and leveraged financing effect.
Operation of hedge funds
In the initial hedging operation, the fund manager buys a put option with a certain price and term after buying a stock. The utility of put option is that when the stock price falls below the option-limited price, the holder of seller option can sell his stock at the option-limited price, thus hedging the risk of stock decline. In another hedging operation, the fund manager first chooses a bullish industry, buys several high-quality stocks in this industry, and sells several inferior stocks in this industry according to a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will exceed other stocks in the same industry, and the gain from buying high-quality stocks will be greater than the loss from shorting inferior stocks; If the expectation is wrong, the stocks of this industry will fall instead of rising, then the decline of the stocks of poor companies will be greater than that of high-quality stocks, and the profit of short selling will be higher than the loss caused by the decline of buying high-quality stocks. It is precisely because of this mode of operation that early hedge funds were regarded as a conservative investment strategy for fund management. But with the passage of time, people's understanding of the role of financial derivatives has gradually deepened. In recent years, hedge funds have been favored because of their ability to make money in a bear market. From 1999 to 2002, the average annual loss of ordinary Public Offering of Fund was 1 1.7%, while the average annual profit of hedge funds was 1 1.2%. There is a reason why hedge funds have achieved such impressive results, and their gains are not as easy as the outside world understands. Almost all hedge fund managers are excellent financial brokers.
Financial derivatives whose prices/trading volumes are used by hedge funds (for example, options) have three characteristics:
First, it can leverage larger transactions with less funds, which is called the amplification of hedge funds, which is generally 20 to 100 times; When the transaction volume is large enough, it can affect the price;
Secondly, according to Lorenz Glitz, because the buyer of the option contract has only rights but no obligations, that is, on the delivery date, if the exercise price of the option is unfavorable to the option holder, the holder can not perform it. This arrangement reduces the risk of option buyers, and at the same time induces people to make riskier investments (that is, speculation);
Thirdly, according to John Hull, the greater the deviation between the exercise price of the option and the spot price of the asset (specific subject matter) of the option, the lower its own price, which brings convenience to the subsequent speculative activities of hedge funds.
After hedge fund managers discovered the above characteristics of financial derivatives, their hedge funds began to change their investment strategies. They changed the investment strategy of hedge trading to manipulate several related financial markets through a large number of transactions and profit from their price changes.
At present, there are more than 20 investment strategies commonly used by hedge funds, which can be divided into the following five methods:
(1) long position and short position, that is, buying and selling stocks at the same time, which can be net long position or net short position;
(2) Market neutrality, that is, buying stocks with low stock prices and selling stocks with high stock prices;
(3) Convertible bond arbitrage, that is, buying convertible bonds at a low price and shorting stocks at the same time, and vice versa;
(4) global macro, that is, analyzing local economic and financial systems from top to bottom, and trading according to political and economic events and major trends;
(5) Managing futures, that is, holding long and short positions in various derivatives.
The two most classic investment strategies of hedge funds are "short selling" and "leverage".
Short selling, that is, buying stocks as a short-term investment, is to sell the stocks bought in the short term first, and then buy them back when the stock price falls to earn an arbitrage. Almost all short sellers borrow other people's stocks to make short positions ("long position", which means buying their own stocks for long-term investment). It is most effective to take a short strategy in a bear market. If the stock market rises instead of falling, and short sellers bet in the wrong direction of the stock market, they must spend a lot of money to buy back the appreciated stocks and eat into losses. Shorting this investment strategy is not adopted by ordinary investors because of its high risk.
"Leverage" has multiple meanings in financial circles. Its English word basically means "lever". Usually refers to expanding one's capital base through credit. Credit is the lifeblood and fuel of finance, and entering Wall Street (financing market) through "leverage" has a "symbiotic" relationship with hedge funds. In high-risk financial activities, "leverage" has become an opportunity for Wall Street to provide chips for big players. Hedge funds borrow money from big banks, while Wall Street provides services such as buying and selling bonds and backstage. In other words, hedge funds with bank loans will in turn invest a lot of money back to Wall Street in the form of commissions.
Famous hedge funds
The most famous hedge funds are george soros's Quantum Fund and Julius Robertson's Tiger Fund, both of which have created compound annual returns of 40% to 50%. High-risk investment may bring high returns to hedge funds, and it may also bring unpredictable losses to hedge funds. The biggest hedge fund can't be invincible in the unpredictable financial market forever.
quantum fund
Shuang Ying Fund, the predecessor of george soros 1969 Quantum Fund, was founded by george soros with a registered capital of US$ 4 million. 1973, the fund was renamed Soros fund, and its capital jumped to120,000 USD. There are five hedge funds with different styles under Soros Fund, and Quantum Fund is the largest one and one of the largest hedge funds in the world. 1979 Soros renamed his company again and officially named it Quantum Company. The so-called quantum comes from Heisenberg's uncertainty principle of quantum mechanics, which is consistent with Soros's view of financial market. The law of uncertainty holds that it is impossible to accurately describe the motion of atomic particles in quantum mechanics. Soros believes that the market is always in an uncertain and constantly fluctuating state, but it is possible to make money by gambling with obvious discounts and unpredictable factors. The smooth operation of the company and the price exceeding par value are based on the supply and demand of stocks.
The headquarters of Quantum Fund is located in new york, but its investors are all non-American foreign investors, in order to avoid the supervision of the US Securities and Exchange Commission. Quantum funds invest in commodities, foreign exchange, stocks and bonds, and make extensive use of financial derivatives and leveraged financing to engage in all-round international financial operations. With Soros's excellent analytical ability and courage, quantum funds have gradually grown in the world financial market. Because Soros has accurately predicted the extraordinary growth potential of a certain industry and company many times, he has gained excess returns in the rising process of these stocks. Even in the bear market where the market fell, Soros made a lot of money with his superb short-selling skills. By the end of 1997, the quantum fund had increased its total asset value to nearly $6 billion. The $65,438+0 injected into the Quantum Fund in 65,438+0969 has increased to $30,000 by the end of 65,438+0996, which is an increase of 30,000 times.
Tiger fund
From 65438 to 0980, Julian Robertson, a well-known brokerage, set up his own company-Tiger Fund Management Company with a financing of 8 million US dollars. 1993 Tiger Fund, a hedge fund under Tiger Fund Management Company, successfully attacked the pound and lira and gained huge profits in this operation. Since then, Tiger Fund has gained great fame and been sought after by many investors. Since then, the capital of Tiger Fund has expanded rapidly, eventually becoming the most prominent hedge fund in the United States.
Since the mid-1990s, the performance of Tiger Fund Management Company has been rising, and great achievements have been made in stock and foreign exchange investment. The company's highest profit (excluding management fees) reached 32%. 1in the summer of 998, its total assets reached the peak of $23 billion, and it once became the largest hedge fund in the United States.
1998 In the second half of the year, Tiger Fund made a series of investment mistakes and went downhill from then on. During the period of 1998, after the Russian financial crisis, the exchange rate of the Japanese yen against the US dollar once fell to 147: 1. It is expected that the exchange rate will fall below 150 yen. Robertson ordered his Tiger Fund and Jaguar Fund to short the yen in large quantities, but the yen soared to 1 15 yen within two months without any improvement in Japan's economy, and Robertson suffered heavy losses. Among the biggest losses in a single day (1998 10.07), Tiger Fund lost $2 billion, and in September of 1998 and June of 10, Tiger Fund lost nearly $5 billion in yen speculation.
During the period of 1999, Robertson invested heavily in the shares of American Airlines Group and Waste Management Company, but the share prices of these two commercial giants continued to fall, and the Tiger Fund was hit hard again.
From 1998 to 12, nearly $2 billion of short-term funds were withdrawn from Jaguar Fund, and from 1999 to 10, a total of $5 billion was withdrawn from Tiger Fund Management Company. The withdrawal of investors has prevented fund managers from focusing on long-term investments, thus affecting the confidence of long-term investors. Therefore, on October 6th, 1999/kloc-0, Robertson requested that the redemption period of his three funds, Tiger, Cougar and Jaguar, be changed from March 3rd, 2000 to semi-annual, but on March 3rd, 2000, Robertson was in Tiger Fund. After the collapse of Tiger Fund, it liquidated $6.5 billion in assets, of which 80% was returned to investor Julian? Robertson personally left $654.38+$50 million to continue his investment.
Hedge fund investment case
In many known hedge fund investment cases, when the prices of financial markets are disturbed by hedge funds, these prices will continue to fall in the direction expected by hedge funds. At the same time, the more serious the damage to the attacked country, the better for the attacked hedge fund. The result is a redistribution of wealth between hedge funds and nation-states. From the perspective of fair distribution, this behavior of hedge funds is considered to be close to monopoly, so its income is close to monopoly profit. Economists believe that the market is an effective resource allocation mechanism. However, once hedge funds manipulate prices, the chances of winning or losing are not equal, which will lead to the destruction of the market itself, including the monetary system, not to mention improving the efficiency of the market. Judging from the values of economics, since there is no efficiency, there is no moral foundation. Because of the redistribution of wealth caused by this behavior, the winner's income is not only at the expense of the loser's equal loss, but also at the expense of the loser's greater loss, even the collapse and failure of its monetary system and economic mechanism; From a global perspective, it is a net welfare loss.
1, 1992 sniper pound:
Since 1979, the European economy, which has not yet unified the currency, has unified the currency exchange rates of various countries and formed the European currency exchange rate linked insurance system. The system stipulates that national currencies are allowed to float within 25% of the European "central exchange rate". If the exchange rate of a member country exceeds this range, the central banks of other countries will take action to intervene. However, the economic development of European member States is unbalanced, and fiscal policies cannot be unified at all. The currencies of different countries are affected by their respective interest rates and inflation rates. Therefore, sometimes, the linked insurance system forces the central bank to take actions against its will. For example, when foreign exchange transactions fluctuate violently, these central banks have to buy weak currencies and sell strong currencies to maintain the stability of the foreign exchange market.
1989, after the reunification of East and West Germany, Germany's economy grew strongly, while the German mark was firm. 1992, Britain was in a period of economic depression and the pound was relatively weak. In order to support the pound, the interest rate of British banks has been high, but this will inevitably hurt Britain's interests, so Britain hopes that Germany will lower the interest rate of the mark to ease the pressure on the pound. However, due to the overheating of the German economy, Germany hopes to use the high interest rate policy to cool the economy. Due to Germany's refusal to cooperate, Britain continued to fall in the money market. Although Britain and Germany joined hands to sell marks for pounds, it still didn't help. 1In September, 1992, the governor of the German central bank published an article in the Wall Street Journal, in which he mentioned that the instability of the European monetary system can only be solved by currency devaluation. Soros had a premonition that the Germans were going to retreat, and Mark no longer supported the pound, so his quantum fund borrowed a large sum of pound, and 5% of the deposit bought Mark. His strategy is: before the exchange rate of the pound falls, buy the mark with the pound, and when the exchange rate of the pound plummets, sell part of the mark to pay back the original borrowed pound, and the rest is the net profit. In this operation, Soros's quantum fund shorted the pound equivalent to $7 billion and bought the mark equivalent to $6 billion. In more than a month, it made a net profit of $65.438+$50 billion, while European central banks lost $6 billion. The event ended with the pound exchange rate falling by 20% within 654.38+0 months.
2. Asian financial turmoil
1In July 1997, Quantum Fund sold a lot of Thai baht, forcing Thailand to abandon its long-term fixed exchange rate pegged to the US dollar and float freely, thus triggering an unprecedented crisis in Thailand's financial market. After that, the crisis quickly spread to all countries and regions with freely convertible currencies in Southeast Asia, and Hong Kong dollar became the most expensive currency in Asia. Later, Quantum Fund and Tiger Fund tried to attack the Hong Kong dollar, but the Hong Kong Monetary Authority had a large amount of foreign exchange reserves, and the authorities raised interest rates sharply, which made the hedge fund plan unsuccessful. However, high interest rates caused Hong Kong's Hang Seng Index to plummet by 40%. They realized that short selling the Hong Kong dollar and stock futures at the same time, the former led to soaring interest rates and dragged down the entire Hong Kong stock market, and they were "sure" to make a profit. 1In August, 1998, Soros joined hands with a number of international giant financial institutions to attack Hong Kong's foreign exchange market, stock market and futures market on a large scale, which ended in fiasco. However, the Hong Kong government intervened in the market in August of 1998, which made hedge funds fail in both the foreign exchange market and the Hong Kong stock futures market.