The increasing interest in hedge funds in Germany started back in 2004 with the introduction of the Investment Modernization Act. However, hedge funds also entail a certain risk, as they represent a "black box" for most investors - after all, it is almost impossible to understand exactly which strategy is being pursued and how the returns are being generated. Even the name itself contains a misleading element, as investors might assume a product to hedge existing securities. But in fact, hedge funds do not offer any additional hedging, but only fundamentally the possibility to selectively enter into new risk-return positions and to expand the portfolio.

Hedge funds are counted among the group of alternative investments in which, in addition to traditional asset classes - such as money markets, stocks and bonds - investment strategies (for example, "buy-and-hold") and other asset classes such as precious metals as well as special investment strategies such as short selling are used. However, hedge funds are generally not tied to a specific asset class or strategy and accordingly offer a high degree of flexibility, which is the important characteristic of a hedge fund. Other important features also include special return profiles, performance-based management compensation and low regulation.

The different hedge fund strategies

Basically, it can be stated that hedge funds always pursue their own individual strategy and due to their numerous design options, many different investment strategies have also developed. Due to this high diversity, it is also quite difficult to compare the different hedge funds with each other, but there are certainly some approaches that try to categorize the hedge funds according to their investment strategy. This categorization is mainly fed by data made available by special providers. However, these hedge fund data providers pre-sort their databases according to specific strategy groups, so that any hedge fund wishing to report its own performance must first assign itself to one of the strategy groups. However, data providers sometimes differ greatly and while some do not even record ten different strategy groups, other database providers offer almost 40 of the hedge fund strategies. However, even economists do not really agree on how exactly a hedge fund can be categorized and which strategies are actually suitable as a generic term. Basically, however, three upper strategies can be noted, which themselves are once again divided into further sub-strategies:

•     Event-driven strategies
•     Market neutral strategies
•     Opportunistic strategies

Fixed Income Arbitrage", which is also often referred to as "Bond Arbitrage" in Exness Thailand, identifies subjective mispricing of fixed income securities by analyzing yield curves as well as volatility patterns. Once these mispricings are found, speculation is then made that they will be eliminated. In this particular strategy, a fixed focus of speculation is sought, which in the case of fixed-income securities can be, for example, the maturity, type, credit rating or interest rate. For this reason, a variety of hedge fund strategies can also be subsumed under the umbrella term "fixed income arbitrage." These include, for example, capital structure arbitrage with a focus on maturity, credit spread arbitrage with a focus on credit quality, yield curve arbitrage with a focus on interest rate, and mortgage backed securities arbitrage with a focus on bond type.