Funds Market neutral funds attempt to produce return series that have no or low correlation with traditional markets such as the US equity or fixed income markets. Market neutral strategies are characterized less by what they invest in than by the nature of the returns. The key feature of market neutral funds are the low correlation between their returns and the traditional asset's. Event Driven Funds Event driven funds seek to make profitable investments by investing in a timely manner in securities that are presently affected by particular events. For example, a fund might do pairs trading, and buy stocks that they think will move up and sell stocks they think will move down.
Managers typically are either systematic or discretionary.
Systematic managers are primarily trend followers who rely on computer models based on technical analysis. Discretionary managers usually take a less quantitative approach and rely on both fundamental and technical analysis. The Hedge Fund Industry and Quantitative Methods Quantitative methods have been successfully applied in the hedge fund industry to improve returns, and control risk. All rights reserved.