The classification of private placement strategy is not only the first step for private investors to learn, but also the first step for private investors to allocate assets and evaluate risks. The following is a brief introduction to the strategies of private equity fund, such as stock investment, managed futures, relative value, event-driven, portfolio investment, bond investment, macro hedging and compound investment.

Private placement strategy architecture diagram

Stock strategy

The stock strategy takes investment in stock assets as the main source of income, and the investment targets are the stocks of listed companies in Shanghai and Shenzhen stock markets, as well as financial derivatives related to stocks (stock index futures, ETF options, etc.). ). At present, the stock strategy is the most mainstream investment strategy in the domestic sunshine private equity industry, and about 80% of private equity funds adopt this strategy. According to the size of risk exposure, it is divided into three sub-strategies: long stock, long stock and neutral stock market.

Stock bull market strategy

Stock bulls mean that fund managers buy stocks at low prices based on their optimism about a certain stock, and sell them when the stock rises to a certain price, so as to obtain the difference income. The investment profit of this strategy is mainly realized by holding stocks, and the rise and fall of the stock portfolio determines the performance of the fund. Its essence is simple stock trading operation, and this strategy has the characteristics of high risk and high return.

Stock long and short strategy

In short, the stock long-short strategy is an investment strategy of allocating different proportions of stock bulls and bears in stock investment (short selling stocks, short selling stock index futures or stock options, etc.) on the basis of various theoretical models and experiences. ), build a portfolio that meets its expected return and risk characteristics, and keep tracking and adjusting. Compared with the stock long and short strategy, * * * has the same point that assets are mainly invested in stocks, and the core is stock selection. The difference is that stock bulls only need to choose undervalued stocks, and the stock long-short strategy also needs to choose overvalued targets, and at the same time take long-short operations to hedge portfolio risks. This strategy generally presents the characteristics of medium income and medium risk.

Neutral strategy of stock market

The neutral strategy in the stock market means that the fund manager completely hedges the systemic risk of the stock portfolio by means of securities lending, stock index futures, options and other tools, or leaves only a very small risk exposure to obtain excess returns. Stock market neutral strategy can be regarded as a special implementation of stock long and short strategy. Market-neutral strategy requires that the systematic risk of portfolio is approximately zero, and fund managers must build a rigorous portfolio risk hedging model to estimate it to ensure that the risk exposure of their long positions and short positions is equal. The income of such funds mainly comes from the difference between long and short positions. This strategy is generally characterized by low returns and low risks.

Managing futures strategy

Managing futures strategy is called commodity trading consultant strategy (CTA), which mainly invests in commodity futures, financial futures, options and derivatives, foreign exchange and currency. The key to distinguishing the management futures strategy from other strategies is that futures are leveraged transactions, and investors can multiply their gains (or losses). Short selling is as common as long selling (there is a long position and a short position behind every futures contract), and investors can benefit from ups and downs. This strategy generally includes three sub-strategies: futures trend strategy, futures arbitrage strategy and compound futures strategy.

Futures trend strategy Futures trend strategy refers to the fund manager tracking the rising and falling trend of commodity prices through qualitative and quantitative analysis methods, and obtaining income through long and short two-way means. Such strategies are generally characterized by high returns and high risks.

Futures arbitrage strategy

Futures arbitrage strategy means that fund managers make use of the unreasonable price difference of the same futures product in different markets and at different time points or the unreasonable price difference of related futures products in different trading places to make profits through qualitative and quantitative analysis methods. It is the key to the success of arbitrage to deeply understand the spread and find unreasonable pricing. Arbitrage is an effective trading mode from the perspective of profit-seeking or hedging. Such strategies are generally characterized by low returns and low risks.

Compound futures strategy

Compound futures strategy refers to the fund manager's gain from the ups and downs of the futures market through various analytical methods and trading means. This strategy has a large capital capacity and generally presents the characteristics of medium income and medium risk.

Relative value strategy

Relative value strategy emphasizes profit from the relative price of assets, which involves two highly related assets or the same asset in different markets at the same time. When the price difference between these two assets (markets) becomes large enough, buy assets with low prices and sell assets with high prices to obtain the price difference between them. Simply put, the relative value strategy is risk-free or low-risk arbitrage. This strategy generally includes ETF arbitrage strategy, convertible bond arbitrage strategy and graded fund arbitrage strategy. Such strategies are generally characterized by low returns and low risks.

ETF arbitrage strategy

ETF arbitrage strategy, because ETF funds can trade in the primary and secondary markets at the same time, when there is an unreasonable price difference between the net value of ETF shares in the primary market and the transaction price in the secondary market, it is the emergence of trading opportunities. Generally, there are two trading methods: one is discount arbitrage, when the price of ETF in the secondary market is less than the net value, investors can buy ETF in the secondary market, then redeem ETF shares in the primary market, and then sell the stocks in the ETF basket in the secondary market to earn the difference; The second is premium arbitrage, which is opposite to discount arbitrage.

Arbitrage strategy of convertible bonds

Convertible bond arbitrage refers to the risk-free profit-making behavior through the ineffectiveness of pricing between convertible bonds and related underlying stocks. The main principle of convertible bonds arbitrage: when there is a relative discount between the conversion parity of convertible bonds and the underlying stock price, there will be arbitrage space between them. Investors can immediately convert convertible bonds into stocks and sell them, or they can immediately sell stocks, and then buy convertible bonds and immediately convert them into stocks to repay the previous securities lending.

Arbitrage strategy of graded funds

Graded funds, also known as "structured funds", refer to the types of funds that show two-level (or multi-level) risk-return performance with a certain differentiated fund share by decomposing the fund income or net assets under a portfolio. Most stock-based graded funds are divided into three types of shares: basic shares, class A shares (stable shares for obtaining agreed returns) and class B shares (aggressive shares with leverage). When the net value of the basic share is significantly higher than the overall secondary market price obtained by the two types of sub-funds according to the initial ratio, there is a discount arbitrage opportunity. Investors can buy two seed shares in the secondary market, apply to merge the two seed shares into a basic share in the market, and then redeem the basic share in the market. When the net value of the basic share is obviously lower than the overall secondary market price obtained by the initial proportion of the two types of sub-shares, the premium arbitrage opportunity arises. Investors can buy the basic share in the market, then apply to split the basic share into two sub-shares, and then sell the two sub-shares in the secondary market.

event driven strategy

Event-driven investment strategy is arbitrage by analyzing the different effects on investment targets before and after major events. Fund managers generally need to estimate the probability of an event and its impact on the underlying asset price, intervene in advance to wait for the event to happen, and then choose the opportunity to quit. This strategy mainly includes private placement and merger and reorganization. This kind of strategy is generally characterized by high risk and high return.

Private placement strategy

Private placement refers to investing the raised funds in private equity, that is, mainly investing in the non-public offering of listed companies. Private placement usually has good expected returns: on the one hand, private placement is good for the stock price of listed companies; On the other hand, private placement has a discount advantage because it has got the "group purchase price". Private equity funds usually need a large scale to effectively spread risks, and will face the situation that the raising cycle does not match the fixed project cycle. In addition, because the fixed-income investors will have a lock-up period of 12 months, the liquidity of fixed-income funds is worse than that of stock funds.

Merger and reorganization strategy

This strategy is to bet on the concept of restructuring shares and make a profit after the company announces mergers and acquisitions.

Combination strategy

Portfolio strategy refers to the application of the concept of "asset allocation" in investment and financial management to a single fund, and the fund manager decides the asset allocation ratio of different markets and different investment tools according to the changes in the global economic and financial situation. Portfolio strategy is usually used as a tool for asset allocation by investing in many different types of professional funds, such as stock funds, bond funds, money funds and even absolute income funds. Investing in "portfolio funds" can give full play to the diversified income and diversify investment risks, but the funds needed to have a perfect fund portfolio are far less than those needed to establish a portfolio.

FOF

FOF (Fund of Funds) is a fund that invests in other investment funds. FOF does not directly invest in stocks or bonds, and its investment scope is limited to other funds. Indirectly holding securities assets such as stocks and bonds by holding other securities investment funds. It is a new type of fund that combines fund product innovation and sales channel innovation.

mother

MOM (manager's manager) is the manager's manager mode. Refers to a fund product, which is divided into two levels: parent fund and sub-fund. The parent fund raises funds and then distributes the funds to the subordinate sub-fund managers for management. Of course, the parent fund manager is not only doing the work of allocating funds, but also making judgments according to multi-macro trends, making asset allocation plans, and then selecting the best sub-fund manager under various investment styles, and can also adjust the allocation of funds, increase or decrease sub-fund managers and so on after the allocation of funds. FOF directly invests in existing fund products, while MOM gives funds to several excellent fund managers for warehouse allocation management, which is more flexible.

child

TOT(Trust of Trusts) refers to the trust products invested in Sunshine Private Equity Investment Trust Plan, which can help investors to choose the appropriate Sunshine Private Equity Fund, build a portfolio and adjust it in time to obtain medium and long-term excess returns.

Bond strategy

Bond strategy refers to the strategy of investing in bonds specifically and combining bonds to seek more stable income. In China, the investment targets of bond strategy are mainly national debt, financial debt and corporate debt. Usually bonds provide investors with fixed income and repay the principal at maturity, so bond funds have the characteristics of stable income and low risk. In addition, the bond strategy can also have a small amount of funds invested in the stock market (convertible bonds, new shares) to improve returns.

Macro hedging strategy

Macro-strategic hedge fund refers to making full use of the basic principles of macroeconomics to identify the imbalance and mismatch of financial asset prices. Internationally, it invests in foreign exchange, stocks, bonds, treasury bonds futures, commodity futures, interest rate derivatives and options. The operation is a combination of multiple short positions, and certain leverage is used to improve the income at a certain moment. The main advantages of macro strategy are low correlation with stock market and bond market, flexible investment, and can also create income when the stock market is in a downturn. This kind of strategy is generally characterized by higher risks and higher returns.

Compound strategy

This strategy operates hedge funds by combining various strategies of hedge funds. Every hedge fund strategy has its advantages and disadvantages. Through the combination of multiple strategies, the risk of a single strategy can often be smoothed and the performance tends to be stable. Such strategies are generally low-risk and low-return.

Investment is risky, be careful all the way!

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