Hedge Fund Mandates - PM and Analyst Roles. Hedge fund hires and people moves. New hedge fund mandates. Long/Short Equity
The most commonly used strategy among hedge funds in recent years is a directional strategy that involves equity oriented investing on both the long and short sides of the market. The objective is not to be market neutral. Managers have the ability to shift from value to growth, from small to mediumto large capitalization equities, and from a net long position to a net short position. The focus may be regional, such as long/short US or European equity, or sector specific, such as long and short technology or healthcare securities. Long/short equity funds tend to build and hold portfolios that are substantially more concentrated than those of traditional equity funds. Managers may use equity index futures, such as the Dow Jones EURO STOXX 50 Future or the Dow Jones EURO STOXX Sector Index Futures, equity options and ETFs to hedge exposures and/or increase returns.
Global macro managers carry long and short positions in any of the world’s major capital or derivatives markets. These positions reflect their views on overall market direction as influenced by major economic trends and/or events. The portfolios of these funds can include equities, bonds, currencies, and commodities in the form of cash or derivatives instruments. Most funds invest globally in both developed and emerging markets. This strategy lends itself to exchange traded futures and options more than most. Given the potentially global nature of the fund, using exchangetraded products is often one of the simplest and most efficient means to gain such coverage.
Equity Market Neutral
This investment strategy is designed to exploit equity market inefficiencies and usually involves simultaneous long and short matched equity portfolios of the same size within a country. Market neutral portfolios are designed to be either beta or currency neutral, or both. Well-designed portfolios typically control for industry, sector, market capitalization, and other exposures. Leverage is often applied to enhance returns. In this strategy, equity index futures, such as the Dow Jones EURO STOXX 50 Future or the Dow Jones EURO STOXX Sector Index Futures and/or ETFs could be used to efficiently provide leverage and/or neutralize certain parts of the portfolio during volatile market conditions.
Fund managers invest in the debt, equity or trade claims of companies in financial distress and general bankruptcy. In order to revive financial stability, the securities of companies in need of legal action or restructuring typically trade at substantial discounts to par value and thereby attract investments when managers perceive a turn-around. Where available, individual Eurex equity options might be used to benefit from the apparent volatility in equity price movement.
Often called junk bonds, this sub-set refers to investing in low-graded fixed income securities of companies that show significant upside potential. Managers generally buy and hold high yield debt. Where views are taken with respect to credit spreads versus a more creditworthy yield curve, interest rate futures such as the Euro Bund, Euro Bobl and Euro Schatz Future could be used as one leg of the credit trade.
Fixed Income Arbitrage
The fixed income arbitrageur aims to profit from price anomalies between related interest rate securities. Most managers trade globally with a goal of generating steady returns with low volatility. This category includes interest rate swap arbitrage. Interest rate futures, particularly government bond futures such as the Euro Bund, Euro Bobl and Euro Schatz Futures are frequently used to exploit and hedge some of these opportunities.