Hedged strategies represent a diverse group of strategies that may serve multiple roles. Investing in hedged strategies offers the potential to reduce downside risk while seeking positive returns. These strategies can provide flexibility to adapt to changing market conditions, enhancing portfolio stability and risk-adjusted returns, particularly in uncertain environments. This has historically made hedged strategies a popular diversification and outcome investing tool for institutional investors.
With over 30 years collective experience, our investment teams have garnered strong expertise in trading, investing and risk management. This experience is coupled with long-standing relationships in the hedge fund industry and an investment philosophy based on measuring, monitoring and managing risk.
US$7.2 bn
Hedged strategies assets under management
30+
Years investing in hedged strategies
35+
Investment professionals
Data as of 30/06/2025.
Hedged strategies refer to a variety of investing approaches that use different trading techniques across various asset classes. Because of this diversity, it’s essential to understand the specific characteristics of each strategy. This knowledge will help you choose strategies that are most likely to help you achieve your investment goals.
Long-short equity strategies aim to generate returns by investing in global equity markets through both buying (long) and selling (short) positions.
Key characteristics:
Wide range of investment techniques that seek to profit from pricing inefficiencies.
Key characteristics:
Targets broad, macroeconomic opportunities across various markets and investments
Key characteristics:
Event-driven strategies focus on investing in companies experiencing corporate events.
Key characteristics:
Hedged strategies represent a diverse group of strategies that may serve multiple roles. This has historically made hedged strategies a popular diversification and outcome investing tool for institutional investors.
1 January 2014 - 31 December 2024
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|---|---|
Relative Value -0.29% | Event-Driven 10.57% | Global Stocks 23.07% | Relative Value -0.43% | Global Stocks 28.40% | Equity Long/Short 17.89% | Global Stocks 22.35% | Global Macro 8.98% | Global Stocks 24.42% | Global Stocks 19.19% |
Global Stocks -0.32% | Global Stocks 8.15% | Equity Long/Short 13.29% | Global Bonds -1.20% | Equity Long/Short 13.71% | Global Stocks 16.50% | Event-Driven 12.41% | Relative Value -0.68% | Equity Long/Short 11.37% | Equity Long/Short 11.97% |
Equity Long/Short -0.97% | Relative Value 7.67% | HFRI Composite 8.59% | Event-Driven -2.13% | HFRI Composite 10.45% | HFRI Composite 11.83% | Equity Long/Short 11.67% | HFRI Composite -4.14% | Event-Driven 10.42% | HFRI Composite 9.83% |
HFRI Composite -1.12% | Equity Long/Short 5.47% | Event-Driven 7.59% | Global Macro -4.08% | Event-Driven 7.49% | Event-Driven 9.26% | HFRI Composite 10.16% | Event-Driven -4.83% | HFRI Composite 8.12% | Event-Driven 9.27% |
Global Macro -1.26% | HFRI Composite 5.44% | Global Bonds 7.39% | HFRI Composite -4.75% | Relative Value 7.42% | Global Bonds 9.20% | Global Macro 7.72% | Equity Long/Short -10.13% | Relative Value 6.95% | Relative Value 8.72% |
Global Bonds -3.15% | Global Bonds 2.09% | Relative Value 5.14% | Equity Long/Short -7.14% | Global Bonds 6.84% | Global Macro 5.38% | Relative Value 7.59% | Global Bonds -16.25% | Global Bonds 5.72% | Global Macro 5.65% |
Event-Driven -3.55% | Global Macro 1.03% | Global Macro 2.20% | Global Stocks -8.20% | Global Macro 6.50% | Relative Value 3.38% | Global Bonds -4.71% | Global Stocks -17.73% | Global Macro -0.34% | Global Bonds -1.69% |
For illustration purposes only, highlighting the performance variation between hedge fund strategies and markets over time. Source: Franklin Templeton Capital Markets Insights Group. HFRI Fund Weighted Composite, HFRI Equity Hedge, HFRI Event Driven, HFRI Macro, HFRI Relative Value = HFR Indices, MSCI, Bloomberg, MSCI.
Correlation refers to the statistical relationship between the returns of a hedged investment and another asset or benchmark. It measures the degree to which the returns of the hedged strategy move in relation to the returns of the other asset or benchmark.
Long-short strategies aim to benefit from movements in the direction of stock prices, employing both long and short positions. Taking a long position involves buying stocks that the investor expects to increase in value. Conversely, a short position involves selling borrowed stocks the investor anticipates will decrease in value, with the plan to repurchase them once the price has fallen. This strategy aims to profit from both rising and falling stock prices capitalising on market mispricing.
Event-driven strategies aim to capitalise on stock price movements resulting from corporate events, such as mergers, acquisitions and restructuring initiatives. For example, merger arbitrage typically involves investing in a company that is a potential merger target before the market has fully priced in the transaction. This allows investors to benefit from the anticipated price movements as the merger progresses.
Private equity is at a turning point, with investors and advisors exploring the best ways to allocate across sub-strategies. There is a compelling case for private equity secondaries serving as the cornerstone of a core/satellite evergreen model.
Evergreen and closed-ended / drawdown funds offer different paths to private markets - understanding their strengths can help investors optimise allocations.
Benefit Street Partners believes that although stock market volatility is unsettling, it is not a cause for concern in the CRE sector. Instead, we should expect increased demand for CRE debt investments over the coming months and quarters.
The global secondary market has grown over the past three decades primarily because of the increased supply of capital committed to private investment funds, according to Lexington Partners. They believe the backdrop for the secondary market continues to remain attractive.
(also referred to as alternative strategies) use both long and short positions in markets. Some of the most common strategies are long and short equity, global macro, relative value, and credit. Hedge strategies appeal to investors who are looking to diversify their investment, in an attempt to minimise market beta returns while seeking alpha and risk-adjusted returns.
is a statistical measure of the relationship between two sets of data. When asset prices move together, they are described as positively correlated; when they move opposite to each other, the correlation is described as negative or inverse. If price movements have no relationship to each other, they are described as uncorrelated.
is the reduction or elimination of investment risk through the purchase of a complementary financial instrument, such as an option or futures contract.
is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk.
takes both long and short positions buying securities seen as undervalued and selling short others seen as overvalued, in the hope of outperforming the market overall while hedging against possible declines.
Investment risks
Hedged strategy investments can be complex and require a thorough understanding of the underlying instruments and strategies.
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