Hedge funds: style analysis: Categorization of the hedge funds and the analysis of the hedge fund industry and strategies

Abstract

Objectives The main objectives of this study were … • Create the categorization of hedge funds’ strategies into the groups • Analyze the performance of hedge fund industry • Determine the best-performing categories of hedge funds.

Summary In the literature review, the classification of funds into different styles is determined, the main strategies of each style are stated and their strengths and weaknesses are explained. “Umbrella review” technique is used for the analysis of the hedge funds’ performance. Alpha, beta and Sharpe ratio are used as performance measurements for the investigation of the efficiency, and 2 articles are chosen for each ratio and synthesized together for the analysis. Finally, the conclusion is derived after the analysis of the all retrieved data.

Conclusions The hedge funds’ strategies can be divided into 4 main styles: Relative Value, Global Macro, Equity Hedge and Event-driven hedge funds. The analysis of the performance measurements showed that the hedge fund industry has significantly developed with time and should be still considered as a perspective industry for the investments. Among hedge funds’ strategies, Global Macro and Event-driven styles are considered as a best-performing categories of hedge funds.