Convertible arbitrage hedge fund Hedge funds that seek out anomalies in pricing between shares, and...
Convertible arbitrage hedge fund
Hedge funds that seek out anomalies in pricing between shares, and convertible bonds that convert into these shares upon maturity and can go both long and short the shares and bonds in order to make money.
Distressed debt hedge fund
Hedge funds that trade in the relatively illiquid market of the debt of companies whose bonds or other borrowings are defined as "distressed". This may be described as when a firm has defaulted on its debt interest payments.
Event driven fund
The investment philosophy is based on an actual or anticipated occurrence of a particular event, such as a merger, bankruptcy announcement, corporate reorganisation or spin off. Examples include distressed securities, private equity and merger arbitrage strategies.
Fixed income arbitrage hedge fund
This type of hedge fund seeks to profit from pricing anomalies of different fixed income instruments such as bonds, and can go both long and short the instruments.
Investment decisions are mainly the result of macroeconomic analysis. Managers can position themselves for both upward and downward trends and use financial instruments with leverage. Typically, managers use a systematic approach. They have a short-term approach to the market with quick asset turnover. Assets include interest rates, currency, stocks, market indices, commodities, cash and derivatives markets.
High water mark
The point after which a hedge fund manager may start charging performance fees to investors. It normally kicks in once a portfolio reaches a new net high.
A period a hedge fund manager may stipulate investors remain invested in the fund after making their initial outlay.
Long/short hedge fund
A fund that buys instruments such as stocks where the manager expects the value will rise. It also takes short positions on stocks where it expects the value will fall. Funds can go short on stocks by buying an option to deliver the stocks at a set price, then buy them more cheaply than the agreed delivery price if the price falls. The fund can also trade options and futures, whose value also rises and falls.
Market neutral or relative value hedge fund
This employs strategies not dependent on the direction of the overall market movements. Examples of these include fixed income arbitrage, convertible bond arbitrage, mortgage- backed securities arbitrage and equity market neutral strategies.
This strategy involves going long the stock of one company involved in a merger or takeover and short the stock of the other party. The fund normally goes long stocks in the takeover target and short the acquirer.
A fee charged in addition to an annual fee and any redemption fees where the manager takes a percentage of the investment - usually 20%-25% of the portfolio's performance once the fund reaches a certain high water mark, usually a new net high.
The prime broker provides safekeeping for cash and securities that the hedge fund owns and is responsible for trade settlement and clearance. They also help with securities, lending and borrowing (eg, when funds wish to go short a stock) and may provide transactional services for futures and options and currencies.
Succeeding co-founder Simon Rogerson
Janus Henderson Global Dividend Index
More than 10 million shares allocated
Long-term strategic holding
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