Investment Strategies of Hedge Funds

17

Conclusions

No, this is not the end. Not even the beginning of the end. But it is, perhaps, the end of the beginning (. . .). Sir Winston Spencer Churchill, Speech at The Lord Mayor’s Luncheon, Mansion House, 10th November 1942

There are people who are pessimistic with regard to the future of the hedge fund industry, but even though some concerns may be reasonable, there is little doubt that hedge funds are going to play a key role in the development of the asset management industry. We are not experiencing the demise of hedge funds, nor the beginning of their end: rather, we are witnessing the end of the beginning of their development.

In this book we have described the different investment strategies adopted by hedge funds, examining all the nooks and crannies of the finance world. For all strategies we underlined that profits and losses are not correlated to the general performance of capital markets, a characteristic that makes hedge funds an important diversification tool when managing a portfolio. The very fact that hedge fund returns tend to be uncorrelated to the general performance of capital markets means that the presence of a hedge fund basket within a traditional portfolio made up of stocks and bonds improves portfolio efficiency.

In recent years, the hedge fund industry grew exponentially in terms of assets under management and number of offered funds; it has remodeled its investment strategy composition and is constantly undergoing deep changes.

The hedge fund ...