The AIG Investments hedge fund of funds team seeks to provide investors with broad exposure to a variety of multi-manager strategies. In our experience, diversification has been a key factor in reducing investment volatility and stabilizing expected returns. We typically use the following categories to define investment strategies: macro, event driven, long/short equity and relative value.
AIG Investments expects each of the four major strategies to generate value in a different way, depending on the risk and potential associated with their respective sub-strategies.
| Macro |
Fundamental/Opportunistic
Systematic/Short-term trading
Commodities |
| Event Driven |
Merger arbitrage
Distressed high yield/
Capital structure arbitrage/
Bank loans |
| Long/Short Equity |
Long/short equity
Short biased equity
Long biased equity |
| Relative Value |
Convertible bond
Fixed income arbitrage
Stock arbitrage
Convertible arbitrage
Mortgage arbitrage
Multi strategy arbitrage
Closed-end fund arbitrage |
Macro
Macro strategies take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions. Investments are usually made in a wide variety of global instruments including stocks, bonds, currencies, derivatives, and commodities. The managers makes judgements about the expected future price direction of these instruments and take long or short positions in a variety of instruments.
Event Driven
The event driven strategy focuses on the securities of companies undergoing some material structural changes. These changes can come in the form of mergers, acquisitions, and other reorganisations.
Long/Short Equity
The long/short equity strategy involves the purchase of financial instruments that the manager believes are undervalued and setting up corresponding short positions in those the manager determines to be overvalued in order to hedge market risk.
Relative Value
The relative value strategy involves taking simultaneous long and short positions in closely related markets. This strategy relies on the exploitation of market inefficiencies, without speculating on the direction of interest rates, currency exchange rates or equity prices and without assuming an unhedged exposure to any particular market.
