What is a quantitative hedge fund?
Quantitative hedge fund is a fund that uses quantitative and hedging trading strategies to invest, and quantitative hedging is a combination of quantitative and hedging concepts. Different from traditional stock funds, quantitative hedge funds add futures options to hedge. It refers to building a long portfolio of stocks through quantitative investment, and then hedging market risks with short stock index futures, and finally obtaining stable excess returns.
Quantification is to establish an investment model on the basis of data collection, analysis and mining with the help of statistics, computer and other disciplines. Hedging refers to managing and reducing the risk of the portfolio system in order to cope with the changes in the financial market and obtain relatively stable returns.
The income sources of quantitative hedge funds mainly come from three aspects: one is to optimize fixed-income products, the other is to play new shares, and the third is the excess income obtained by selected stocks after hedging systemic risks through stock index futures.
Quantify the characteristics of hedge funds;
1, a wide range of investments, stocks, bonds, futures, commodities, etc. It can be used as an investment target with flexible investment strategy.
2. The low correlation with major market indexes weakens the negative impact of systemic risks on investment. No matter whether the stock market goes up or down, there are theoretically ways to make profits and absolute returns.
3. Better risk-adjusted returns. Take the market-neutral strategy as an example, its yield is equivalent to the stock index, and its volatility is similar to the bond index. The risk-adjusted return level is much higher than the stock and bond indexes.
4. It has low correlation with major market indexes and has asset allocation value. Except for Hang Seng Index, the correlation between hedge funds and major market indexes is relatively low. Adding hedge funds to the portfolio can reduce the overall return fluctuation of the portfolio and improve the risk-adjusted return of the portfolio.
After reading the above introduction, I believe everyone has a better understanding of the concept of quantitative hedge funds. Quantitative funds and hedge funds are not exactly the same, so don't think that buying quantitative hedge funds can not bear the risk of losses.