Single-Strategy Fund

Hedge funds investment policies can be defined to be either single-strategy or multiple-strategy. Single-strategy funds are funds that pursue a specific strategy, whereas multistrategy funds are allowed to follow a variety of strategies and allocate capital between strategies without restraints.

Investment philosophies for single-strategy funds can be built on a particular trading strategy (either trend follower or discretionary) or, in a more traditional sense, focusing on the underlyings (sector- or region-based).

Based on the investment objectives, each single strategy fund is asked to classify itself by the database vendor using a broad investment strategy such as long/short equity, relative value, fixed income, macro, event-driven, and so on.

These classification sets are rather heterogeneous as every fund manager follows proprietary strategies within the broadly defined investment objectives. Note that as single-strategy funds focus on a particular market segment and/or strategy, they usually suffer from a lack of diversification and, thus, higher risk when compared to other, for example, multistrategy instruments.

Single-Strategy Fund
Single-Strategy Fund
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