Hedge funds have emerged as one of the most popular options for investments for people in the recent years, as it enables people to grow their money in quite a limited time. The involvement of risk is also low in hedge funds and it enables the investors to enjoy quite good returns. Scott Tominaga mentions that investors across the planet tend to commonly choose to include hedge funds in their financial portfolios owing to the advantages offered by this investment option. He also recommends a number of well-planned strategies that enable investors to enjoy optimal returns through hedge funds.
When it comes to hedge funds, the various hedge managers are required to effectively “hedge” themselves by choosing to short the stocks or by going long. This feature of hedge funds plays a major role in enabling them to garner good revenues for the investors. According to Scott Tominaga, apart from enabling their discerning clients to enjoy a high level of gains, discerning fund managers also assist in providing investors with the assurance that their money is absolutely safe hands. These professionals also tend to employ a number of effective hedging strategies that reduce their involvement in high risks and increase their chances of securing high returns.
Scott Tominaga says that there are a lot of popularly followed hedge funds strategies found in the modern world. The strategy followed by fund managers majorly depends on their investment philosophies and the goals of the discerning investors.
Here are some of the most common types of hedge fund strategies are popularly followed by people today:
- Long/Short Equity: This is one of the most commonly followed hedging strategies across the world. The long/short portfolio option basically enables the investors to properly purchase stocks that belong to multiple firms that are expected to not perform up to the mark. These portfolios usually have an extremely low level of involvement and correlations with the financial market. Due to the fact that this strategy enables investors to enjoy absolute returns irrespective of the market performance and conditions, a number of modern investors choose to invest in long/short portfolios.
- Market Neutral: The market neural funds share quite a bit of similarity with the long/short equity portfolio. These are quite a low-risk investment option, and tend to be independent of the performance and condition of the financial market. The prime focus of such funds tends to be on eliminating or reducing a certain level of market volatility. The market-neutral funds are usually selected by the investors with the aim of enhancing the margin of their overall returns, while also providing them with a good level of assurance of diverse derivatives with the aim of hedging their portfolios.
Scott Tominaga mentions that apart from the options mentioned above, convertible arbitrage is another commonly chosen hedge fund strategy by investors. This process involves buying convertibles with the purpose of shorting their underlining stocks.