Hedge Fund Strategies & Investment Techniques

Hedge funds first began as a way to offer a balanced, or market-neutral, approach to investing that helped deliver reliable returns over time. Throughout the years, the methods to help achieve these returns have evolved and expanded.

While no two funds are identical, funds can be categorized broadly by the type of strategies the managers employ. All of these different strategies, however, share the common goals of helping deliver portfolio diversification, risk management and reliable returns over time.

Short selling and the use of leverage are just two techniques more commonly used by hedge funds than other investment vehicles.

This video discusses different investment tools and techniques that are more common in the alternative industry than with more traditional investment funds. Short selling and the use of leverage are just two techniques commonly used by hedge funds that are explored in the video.


This video discusses a trading strategy known as equity long-short. This is one of the most traditional investment techniques common in the alternative investment industry. The video explains how a fund can purchase stocks the manager expects to increase in value and “short” those stocks that could decrease in value. This strategy can be market neutral if the long and short positions offset each other. Picking the correct stock allows the fund’s investors to profit regardless of whether the market goes up or down as a whole.

Many alternative investment funds use event driven strategies. This means the fund manager will trade stocks in a company based on the likelihood of a corporate event like a merger or acquisition happening. This video explains how fund managers study factors that may impact a major corporate event, and buy or sell stocks based on their research.

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