Hedge Fund Strategies: Risk Arbitrage

This article was originally written by Richard Wilson in his Hedge Fund Blog

Risk arbitrage hedge fund strategies usually involve purchasing stocks of companies that are likely takeover targets, while assuming short positions in the would-be acquiring companies. Risk arbitrage hedge fund managers can employ an event-driven investment strategy or merger arbitrage investment strategy, seeking situations such as hostile takeovers, mergers and leveraged buyouts. Such funds typically experience moderate amounts of volatility. Technically arbitrage is riskless but this is not realistic, the amount of risk taken on within each arbitrage situation is decided by the portfolio management team and traders.

For more information, see all articles on: Alternative Assets, Hedge Funds, Institutional Investing, Investing in Stocks, Portfolio Management, Risk Management

See also:
  • Risk and Return in Fixed Income Arbitrage
  • Are Hedge Fund Strategies Just About Leverage?
  • Why do Hedge Funds Lack Transparency
  • Risk Transparency versus Position Transparency
  • Alternative Routes to Hedge Fund Return Replication
  • Technical Analysis Explained : The Successful Investor's Guide to Spotting Investment Trends and Turning Points

    The Intelligent Investor: The Classic Text on Value Investing

    Financial Statement Analysis: A Practitioner's Guide, 3rd Edition

    Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)

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