In This Chapter
Understanding how hedge funds can be an asset class on their own
Using arbitrage in hedge funds
Checking out short selling, leveraging, and other equity strategies
Observing how hedge funds profit from the corporate life cycle
Hedge funds are wildly different from each other. Because hedge funds are lightly regulated investment partnerships and can take advantage of more investment strategies than other highly regulated investment vehicles, different funds are bound to invest in different ways.
This chapter looks at how you can include hedge funds in your investment portfolio to increase your return for a given level of risk. It also explains arbitrage, the primary investment strategy of many hedge funds, as well as equity-based hedge funds and hedge funds that make money through venture capital and loans. If you want to invest in a hedge fund, you need to know about these various strategies so that you have a better understanding of what a particular hedge fund may be doing. The more you know, the better your questions ...