Hedge funds use alternative strategies to generate returns from "summary" of Institutional Investment Management by Frank J. Fabozzi
Hedge funds employ a variety of strategies that differ from traditional investment approaches in order to achieve returns that are not correlated with traditional asset classes. These alternative strategies often involve taking advantage of market inefficiencies or employing complex trading techniques. By using these alternative strategies, hedge funds aim to generate returns that are not dependent on the overall direction of the market. One common alternative strategy used by hedge funds is long-short equity investing. This strategy involves taking both long and short positions in individual stocks, with the goal of profiting from the relative performance of different companies rather than the overall direction of the market. By going long on stocks that are expected to outperform and shorting stocks that are expected to underperform, hedge funds seek to generate positive returns ...
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