Visual Guide to Hedge Funds

Despite the recent wave of scandals related to the hedge fund industry, interest in hedge funds as a relatively safe alternative investment remains high. Yet details about how the industry operates and the strategies employed by different types of hedge funds is hard to come by. With increasing calls from lawmakers and the media for industry reform, it is incumbent upon finance professionals and high-net-worth individuals to take a good look before leaping into hedge funds. That's where the Bloomberg Visual Guide to Hedge Funds comes in. It provides a graphically rich, comprehensive overview of the industry and its practitioners, zeroing in on how different types of hedge funds work.

• Based on extensive interviews with hedge fund managers, analysts and other industry experts, the book provides a detailed look at the industry and how it works
• Outlines investment strategies employed by both long and short hedge funds, as well as global macro strategies
• Arms you with need-to-know tips, tools and techniques for success with all hedge fund investment strategies
• Provides a highly visual presentation with an emphasis on graphics and professional applications
• Real-life examples take you inside how hedge funds illustrating how they operate, who manages them and who invests in them

How to Use This Book vii

Introduction ix

Chapter 1: Hedge Fund Daily Operations 1

Chapter 2: The Hedge Fund Life Cycle: From Startup to Titan 11

Chapter 3: Hedge Fund Investors 23

Chapter 4: Hedge Fund Capital Raising 31

Chapter 5: Long/Short Equity Strategy 41

Chapter 6: Global Macro Strategy 55

Chapter 7: Event-Driven Strategy 71

Chapter 8: Fixed-Income Strategy 77

Chapter 9: Convertible-Arbitrage Strategy 107

Chapter 10: Quantitative and Algorithmic Trading Strategies 115

Chapter 11: Managed Futures 133

Chapter 12: Credit-and Asset-Based Lending 155

Chapter 13: Multi-Strategy Hedge Funds 171

Chapter 14: Fund of Hedge Funds 179

Appendix A: Bloomberg Functionality Cheat Sheet 199

Appendix B: Answers to Test-Yourself Quizzes 201

References 205

About the Author 207

Index 209

Richard C. Wilson is founder of the Hedge Fund Group, the #1 largest hedge fund association with over 115,000 global members. With a background in capital raising he has built a following through his advisory work, equity partnerships, Wilson Holding Company operating businesses, and by providing consultative quality thought leadership, articles, videos, and over 100 speeches in 15+ countries around the world. Through Richard's 5,000 professionals-deep client base, and global capital raising workshops and family office conferences, he has met face-to-face with well over 2,500 fund managers, and at least as many hedge fund investors over the past 10 years. His team offers the #1 self-directed training and certification program on hedge funds which over 1,400 professionals have joined to date and it is called the Certified Hedge Fund Professional certificate program. He is the author of The Hedge Fund Book: A Training Manual for Professionals and Capital Raising Executives, The Family Office Book: Investing Capital for the Ultra-Affluent, and The Single Family Office: Creating, Operating, and Managing the Investments of a Single Family Office.

Everything you ever wanted to know about hedge funds—and a lot you never thought to ask

What's the difference between an emerging hedge fund and a shooting-star hedge fund?

What are the chief differences between a statistical mean reversion pair trading hedge fund strategy and a discretionary pair trading strategy?

Not sure? Well, you're not alone! Despite hedge funds' huge and growing popularity as a relatively safe alternative investment, details about how the industry operates and the strategies different types of hedge funds use continue to be hard to come by.

Enter Visual Guide to Hedge Funds. With dozens of brilliant graphics and real world examples, it provides you with a comprehensive (and comprehensible) overview of the hedge fund industry and its practitioners, along with detailed explanations of how different types of hedge funds work.

Written by top hedge fund consultant and educator Richard C. Wilson, and based on extensive interviews with hedge fund managers, analysts, and other industry experts, it:

• Takes you inside the hedge fund industry and shows you how it works
• Details the investment strategies used by all major types of hedge funds
• Uses fascinating real-world examples to describe how funds operate, who manages them, and who invests in them
• Arms you with expert tips, tools, and techniques for profiting from all hedge fund strategies
• Uses vivid graphics to breathe life into the concepts, processes, and practices described
• This book will be required reading for the Certified Hedge Fund Professional certificate program which over 1,400 professionals have joined globally.

The Bloomberg Financial Series Visual Guides cover today's most relevant finance and trading topics in a comprehensive, yet easy-to-follow style. The content is presented in the most visual of manners thus bringing to life key concepts for finance professionals and truly lives up to the series name by examining concepts in a highly visual way—all charts are in color and presented in a large format for ease of use. Other strong visual attributes include consistent elements that function as additional learning aids for the reader, such as: Key Points, Definitions, Step-by-Step, Do It Yourself, and Bloomberg Financial Series Visual Guide functionality.