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Directional
· Long Short Equity : Involves investing mainly in equities and derivative instruments. Most common approach is to buy stocks believed to be undervalued and sell others, often in the same industry or country, that are deemed to be overvalued.
· Fixed Income : Combine core long fixed income positions with short sales of fixed income products or index options.
· Futures Trading : Commodity Trading Advisors (CTAs) invest in listed financial and commodity markets as well as in currency markets. They can follow systematic or discretionary strategies.
· Global Macro : Investment strategies are directional and generally cover FI, currencies and stock indices Relative Value.
Relative Value
· Convertible Bond / Capital Structure Arbitrage : Investment in convertible bonds. The basic strategy is to buy the convertible bond and sell short the common stock of the same company.
· Equity Market Neutral / Statistical Arbitrage : Exploits inefficiencies in the market through balanced buying of undervalued securities and selling of overvalued securities enabling either a Beta or a dollar neutral approach to be obtained.
· Fixed Income Arbitrage : The investment return is based on exploiting price anomalies related to interest rate instruments.
· Merger Arbitrage : Merger arbitrage funds invest in companies involved in a merger or acquisition process. They typically go long the targeted company and sell short the stock of the acquiring company.
Event Driven
· Emerging Markets : Investment in equities or bonds from emerging markets.
· Distressed Securities : Involves buying back, at a low price, the securities of companies that are experiencing financial difficulties. The securities targeted may cover a wide range, from senior secured debt (lowest risk) to common stock (highest risk).
· Event Driven : Investment strategy that exploits price movements related to the anticipation of events affecting the life of a company (merger, acquisition, bankruptcy…).
· Relative Value : The objective of this type of strategy is to take advantage of the relative price differentials between related instruments
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