Investor’s Passport to Hedge Fund Profits: Unique Investment Strategies for Today’s Global Capital Markets
The Investor’s Passport to Hedge Fund Profits demystifies international investing and gives you the tools by which to effectively profit from a wide array of asset classes. For the purpose of this book, and in accordance with our outlook, we take a broader, more general view of just what makes a hedge fund a hedge fund. If you begin with the general deﬁnition that a hedge fund is a pooled investment fund that’s structured in such a way so as to reduce risk, preserve capital, and maximize returns in any given market climate, you are off to a good start. In fact, that is really, in a nutshell, what a hedge fund is.
The deﬁnition of a hedge fund has become both ﬂuid and expansive over the years, to the point where there is now a wide variety of hedge fund styles to meet the discerning tastes and unique goals of investors. The more purist view of a hedge fund dictates that it engage in such stereotypical hedging strategies as short selling and derivatives used to hedge the performance of mainstay asset classes (notably stocks) to maximize gains and limit losses to as great an extent as possible. That said, you ﬁnd we are not slaves to traditional hedge fund dogma, in the sense that if you do not use derivatives often, or at all, then you are somehow not really prosecuting a hedge fund approach to your portfolio; we are not tied to the idea that the exclusion or inclusion of select strategies makes or breaks you as a hedge fund manager.
The real issue, in our view, is adherence to the aforementioned deﬁnition, and while your pursuit of realizing same may include your decision to utilize more typical hedge fund mechanisms, doing so is by no means a requirement, and focusing so single-mindedly on the use of such strategies might even cause you to lose sight of the forest for the trees. In actuality, a large number of hedge funds do not utilize derivatives instruments or leverage at all, which is not the popular conception; the popular conception is that hedge funds take massive and highly leveraged positions in a particular asset class that is very much in favor at a particular time with a given manager. Although those funds certainly exist, that is a somewhat overblown view of hedge funds. It is certainly within one’s rights to look at a hedge fund as a mechanism by which to place some (somewhat) managed bets on markets or market components in order to try to make a killing, but that is not the manner in which we embrace the hedge fund concept here. We believe that the core beneﬁt of the hedge fund approach lies in the ability to rotate weightings throughout the available asset classes (as well as countries and regions) on a basis that allows us to, overall, beat benchmark returns.
Rather than selecting a highly speciﬁc style (i.e., distressed securities, special situations, short selling) that rules the way in which our portfolio is composed and managed, we refrain from needlessly boxing ourselves into a corner and instead adopt a more blended approach to our investing. For example, we do not focus primarily on aggressive growth securities or on those that are distressed; we do not believe the use of leverage has to be a mainstay, and that if you choose against its use then you are not really applying a hedge fund perspective to your portfolio management. Our approach is to consider all key asset classes, guided chieﬂy by a mix of fundamental and technical analysis, with some intuitive reasoning thrown in, and utilizing more acutely aggressive options only when it seems to make real sense to do so. You are free to do what you want, and the core methodologies and concepts contained here will serve you well regardless of which speciﬁc hedge fund style you adopt, but we are comfortable with a portfolio management style that involves maintaining a capital preservation foundation from which we construct growth opportunity structures.
- Opportunities Away from the Land of Opportunity
- Accurately Reading the World’s Economies: An Intermarket Primer
- The Tools in Your Equity Toolbox
- Key Strategies for Realizing Winning Returns in Foreign Equities
- Global Fixed-Income Investment Concepts
- Making the Buck in Currency Trading
- Accessing Foreign Real Estate
- Derivative Use for Offense and Defense
- Portfolio Management Applications