Hedge fund definitions

Arbitrage

Definition: Strategies that look to benefit from mispricings of the same instrument/asset or extremely closely related instrument. The strategy covers the following areas: convertible bond arbitrage, tail protection, volatility or opportunistic trades in this area, including but not limited to other areas such as capital structure arbitrage, ETF arbitrage or arbitrage of other closely related
instruments.

Arbitrage – Convertible bond (CB)

Traditionally the strategy looks to isolate mispriced components of convertible securities in order to capture a return to fair value. CBs essentially consists of a bond plus…

Arbitrage – Tail protection (Tail)

Strategies that explicitly look to benefit from large market moves, typically either in the form of large spikes in volatility (either from implied or realised volatility), or…

Arbitrage – Volatility arbitrage (Vol)

Traditionally the strategy looks to identify mispricing of volatility: this can be mispricing of either implied volatility or realised volatility. Strategies can be short/neut…

Arbitrage – Opportunistic (Opp)

Strategies that look to benefit from inconsistent/mis-prcing of the same instrument/asset or extremely closely related instruments/assets. Opportunistic arbitra…

Credit

Definition: Strategies that focus the vast majority of their trading on debt instruments, or instruments that are far more ‘debt-like’ in nature.

Credit – Credit RV (RV)

The strategy focuses on investing in investment and non investment grade securities, primarily corporate debt. The strategy takes a balanced long/short approach where the shor…

Credit – Direct Lending (Dir Len)

Direct lending typically involves investing in first lien loans to middle market companies but can also encompass many other forms of middle market lending, including second l…

Credit – Distressed Credit (Distress)

Strategy typically invests in non-investment grade corporate – and sometimes sovereign – debt, which is frequently stressed (e.g. performing, but priced at a significant d…

Credit – Multi-Credit (Multi)

Broad credit focused strategy where a significant portfolio of their P&L is generated from a combination of relative value credit, distressed credit and/or structured cred…

Credit – Municipal Credit (Muni)

This strategy aims to generate a comparatively substantial income and achieve an additional overall return by actively overseeing collections of both tax-exempt and taxable mu…

Credit – Structured Credit (Struct)

The strategy involves investing in synthetic structured credit and cash structured products including ABS, CLOs, CMBS, and RMBS. Investors can achieve higher returns, portfol…

Credit – Structured Credit LO (StrucLO)

Long only or overwhelmingly long-biased structured credit strategy with some leverage. The managers add value through security selection and can take advantage of depressed se…

Equity long/short

Definition: Investing in global stocks, both on the long and short side. Most funds have a fundamental bias, value and/or growth oriented investment theses are typically adopted. Some managers may also be more tactical/technical in their approach, taking into account flows, positioning on the street and market dynamics as part of the investment decision making process.

US equity long/short (US)

Investing the all or the vast majority of their portfolio into US stocks, both on the long and short side. Most funds have a fundamental bias, value and/or growth oriented inv…

Asia Pacific equity long/short (APAC)

Investing the all or the vast majority of their portfolio into Asian Pacific stocks, both on the long and short side. Most funds have a fundamental bias, value and/or growth o…

European equity long/short (EUR)

Investing all or the vast majority of the portfolio in European stocks, both on the long and short side. Most funds have a fundamental bias, value and/or growth oriented inves…

Global equity long/short (Global)

Investing the portfolio in global stocks, both on the long and short side. The fund is agnostic to country/region to maintain flexibility. Most funds have a fundamental bias,…

Fundamental equity market neutral (FEMN)

Investing the portfolio in stocks, both on the long and short side. To classify as ‘equity market neutral’ funds are expected to run with a very tight net exposure bias, w…

Sector long/short (Sector)

Investing the portfolio in a specific sector, both on the long and short side. The funds may or may not be agnostic to country/region to maintain flexibility, however sector s…

Other long/short (Other)

Long short equity investing, which does not readily fit into the other classification taxonomy.

Equity long / short hedge fund performance

Latest strategy performance chart packs:

Event driven

Definition: Broad strategy category covering funds that invest in securities of companies facing announced and anticipated corporate events. This includes, but is not limited to: M&A, Spin-offs, Company restructurings, some distressed situations (although if this is the dominating part of the strategy it will be classified as ‘credit-distressed’). The strategy identifies mispriced securities with favourable risk/reward characteristics based upon differentiated views of value-unlocking catalysts, event-probabilities and post-event valuations.

Event driven – Activist (Activist)

Activist hedge funds invest in companies that they feel are undervalued and the managers then attempt to drive the value creation process by influencing corporate management t…

Event driven – Merger arbitrage (M&A)

Strategy typically involves taking positions in the securities of a company being acquired in a merger or acquisition. Due to the risk of a deal-break as well as time value of…

Event driven – Multi-strategy (Multi)

Whilst these are funds investing across multiple strategies, they are characterised by their overwhelming focus on the broad event-driven space and therefore placed in their o…

Event driven – Opportunistic (Opp)

Has some similarities to the event-driven ‘multi-strategy’ classification however, as the name suggests, these funds tend to be very opportunistic and dynamically adjust t…

Long biased

Definition: Long only or overwhelmingly long-biased strategies. Covers multiple asset classes.

Long biased – Equities (Equity)

Long only or overwhelmingly long-biased equity strategies. Such funds still have a hedge-fund structure. Funds that are more ‘mutual fund’-like are excluded from this cate…

Long biased – Diversified growth (Div Growth)

A hedge fund where the majority of the capital is deployed in strategies within the long-biased categories.

Long biased – Commodities (Commods)

Funds that take long positions across the commodity complex (e.g., precious metals, base metals, basic materials, soft commodities, agriculture, oil, gas, power, coal & ut…

Long biased – Other (Other)

Long biased investing, which does not readily fit into the other classification taxonomy.

Macro

Definition: Macro funds take positions (can be either directional or relative-value) in currencies, bonds, equities and commodities, based on fundamental and qualitative judgements. Investment decisions can be based on a manager’s top-down views of the world (e.g. views on economy, interest rates, inflation, government policy or geopolitical factors). Relative valuations of financial instruments within or between asset classes can also play a role (or be the dominant part) in the investment process. Primary areas of focus are the liquid instruments of G10 countries, although they may also include emerging markets.

Macro – Fixed income relative value (FIRV)

Fund generates all or a substantial majority of the P&L/risk from relative movements across fixed income assets and their derivatives. Funds are typically looking to profi…

Macro – Commodities (Commods)

These funds are primarily focused on trading commodity futures and options from both the long and short side. They can occasionally include the tactical use of equities, curre…

Macro – Global macro (Global)

Macro funds take positions (can be either directional or relative-value) in currencies, bonds, equities and commodities, based on fundamental and qualitative judgements. Inves…

Macro – Emerging markets (EM)

Macro funds take positions (can be either directional or relative-value) in currencies, bonds, equities and commodities, based on fundamental and qualitative judgements. Inves…

Multi-strategy

Definition: A hedge fund where the capital is deployed across multiple sub-strategies and asset classes. Funds are typically extremely diversified and employ multiple PMs/risk taking groups.

Quant

Definition: Systematic strategies: Funds trade securities based strictly on the buy/sell decisions of computer algorithms. Quant strategies primarily fall into the following categories: Quantitative equity market neutral, Statistical arbitrage, Quant macro/GAA (Global asset allocation), CTA, and risk-premia.

Quant – CTA (CTA)

CTAs (Commodity trading advisors) take primarily directional positions in index level or macro instruments, such as futures or FX contracts, in a systematic fashion. Technical…

Quant macro / GAA (Macro)

GAA (Global asset allocation) is a systematic approach to global macro, with managers taking positions in global markets based on quantitative analysis, taking in information…

Quant – Multi-strategy (Multi)

A hedge fund where the capital is deployed across multiple sub-strategies and asset classes. The overwhelming driver of returns will come from quantitative sub-strategies typi…

Quant – Statistical arbitrage (Stat Arb)

Statistical arbitrage funds typically take price data and its derivatives, such as correlation, volatility and other forms of market data, such as volume and order-book inform…

Quant – Quant equity market neutral (EMN)

Traditional QEMN strategies take fundamental data, such as analyst earnings estimates, balance sheet information and cash flow statement statistics, and systematically rank/sc…

Quant – Risk premia (RP)

Hedge fund risk premia products typically seek to capture the fundamental insights of a class of hedge fund strategies (hedge fund risk premia / Alternative risk premia) along…

Crypto

Definition: Focusing on investments in digital assets. These strategies can be implemented as long-only, long/short or market neutral with discretionary or quantitative approaches. Multi-strategy digital asset hedge funds also exist, and most funds implement a hybrid of strategies.

Source: Aurum’s proprietary Hedge Fund Data Engine database containing data on around 3,100 active hedge funds representing around $3.4 trillion of assets as at December 2025. Information in the database is derived from multiple sources including Aurum’s own research, regulatory filings, public registers and other database providers. Performance in the above chart is asset weighted. Box size reflects the AUM of the hedge fund industry, as tracked by Aurum. See the disclaimer for further details.

Bond index

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Equity index

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