Managing Hedge Fund Risk and Financing: Adapting to a New Era

Opportunistic Strategies

As the name indicates, such strategies seek to profit opportunistically from fundamental themes, inefficiencies and dislocations in the financial markets at a macro, market sector, stock specific, factor, or even exchange level. Depending on their conviction about the fundamental themes influencing the market or their market sector, opportunistic funds may go significantly long or short the market as a whole, creating directionality in their returns. Under this category, we will discuss global macro, equity long/short, emerging-markets, and sector focused strategies.

Global Macro Strategies

The global macro approach to investing attempts to exploit anticipated macroeconomic events, perceived global macroeconomic dislocations¹ or trends and generate outsized positive returns by making leveraged bets on price movements in equity, currency, interest rate, and commodity markets. Global macro portfolios can hold long and short positions in world capital markets for stocks, bonds, currencies, futures, and their derivatives. Macro funds implement positions that incur broad exposure to equity markets, sovereign and corporate fixed income market term structures, and currencies. Term structure exposures arise from exposure to U.S., U.K., and Japanese yield curves and positions intended to profit from yield curve parallel shifts, steepening, flattening, and/or twisting. Currency exposures are primarily to European, U.K. and Japanese currencies. All positions are intended ...