3 Types of Hedge Fund Strategies

Posted on by Bridger Pennington
What should my fund approach be?

Let’s talk Fund Strategies.

I was expanding my knowledge about hedge funds last week by talking with a few friends in my network and reading just about anything I could get my hands on.

But as in all content, there was some good …. and then some bad.

There was useful content … and then some that was entirely useless.

I’m going to share with you guys some things I found that would be useful to know about different fund strategies.

One could bucket fund strategies into a lot of different ways.

I like to bucket them into 3: 

  • The Micros
  • The Macros 
  • The Activists

Now, under each of these strategies, are anywhere from 5-10 different approaches that we talk about! In my course we discuss them, but I’ll give you the brief on these three right now. 

The MICROS. 

  • Micro Funds like to focus on one thing, and one thing only. No time for big picture, multi-strategy approaches.
  • Micros are more detail-oriented.
  • Example: Quants – Trading only from a buy or sell signal on an algorithm.

The MACROS

  • These funds have a big picture mindset.
  • They make decisions based on different economic indicators, trends, and policy changes. 
  • Example: Bridgewater Associates is a $150 billion global macro hedge fund that invests based on economic trends, such as inflation, exchange rates, and U.S. Gross Domestic Product readings.

The ACTIVISTS

  • This type of fund is a little more unique. While most Hedge Funds are just exchanging equity positions, activist funds are trying to influence a stocks market price.
  • Example: A Hedge Fund holding a large short position might publish a report exploiting how a company is another soon to be Theranos.. and then reap the rewards.

Not even scratching the surface there – but you get the idea.

There are many different ways to approach fund strategies. It can become complicated waters to navigate… so hopefully this helped clear things up a little bit!

If you have any questions make sure to hop on my free webinar and I would love to help!

Thanks for the read!

Bridger Pennington

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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.

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