Equity Hedge     8

Investment Themes and Fundamental Analysis

Investment Themes

Fundamental Analysis

Equity Hedge Approaches

Quantitative vs. Qualitative Mix

Universe of Stocks

Style

Liquidity

Net Market Exposure

Research

Leverage

Risks and Risk Control

Stock-Picking Risk

Market Risk

Universe of Stocks

Diversification

Sell Disciplines

Leverage

Source of Return

Recent Growth and Developments in Equity Hedge Investing

Equity hedge managers build equity portfolios by combining core long holdings with short sales of stock or stock index options. Their net market exposure (long positions – short positions) varies, depending on the manager's preference and on market conditions. Ideally, they increase long exposure in bull markets and decrease it (or ...

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