An investment strategy that aims to produce almost the same profit regardless...
A market neutral fund takes independent long and short positions and removes market risk by ignoring direction. The aim is to identify an asset which will outperform another asset, in whichever direction. This is a radical departure from investing in direction. A market neutral fund takes investment decisions in pairs. The idea is to find a pair of assets whose price movements are related, then go long the outperformer and short the underperformer. To be market neutral, the same cash amount is invested in both positions.
An investment strategy which seeks to hedge away exposure to the broader equity market (beta, q.v.) and achieve excess return (q.v.) solely through positive alpha (q.v.). Also known as a long/short strategy.
Having balanced long and short positions resulting in no net exposure to broad market moves.
(go to top) Any hedge fund investment strategy that attempts to eliminate market risk and be profitable in any market condition. See also Relative Value.
A type of investment strategy that is intended to be "neutral" to traditional market volatility. The strategy seeks to provide a stated or absolute return rather than attempt to outperform a traditional market index. The goal is to attain the target return regardless of broad market direction.
A strategy undertaken by a person or fund attempting to profit from the current direction of the market. A person using the strategy will take both long and short positions at the same time.
See Equity market neutral
An investment strategy or portfolio is considered market neutral if it seeks to entirely avoid some form of market risk, typically by hedging. In order to evaluate market neutrality, it is first necessary to specify the risk being avoided. For example, convertible arbitrage attempts to fully hedge fluctuations in the price of the underlying common stock.