What's the difference between

CFA Level III
#1

…Equity Market Neutral HF Strategy and Hedged Equity HF Strategy?

#2

Market Neutral eliminates systematic risk (Beta = zero or close)… Hedged equity is just long/short, but doesn’t necessarily seek to eliminate systematic risk (i.e. can tilt towards mostly short or mostly long)

#3

Thank You and what’s the difference between Currency Overlay and Separate Asset Allocation techniques of Currency Risk Management

#4

Currency Overlay manager will manage currency component of the portfolio but within the overall objectives and constraints of the IPS. Seperate Asset Allocation: under this, the currency component is managed seperately with its own objectives as an asset class.

#5

“TerminatorX”… part of a late-80’s rap classic. Anyway, in Currency Overlay you hire a separate manager who is experienced in F/X to manage the currency exposure within the existing portfolio (i.e. not add to overall risk). In Separate Asset Allocation, you are investing in a fund that attempts to earn alpha through currency management. Note the distinction, because with Currency Overlay you are trying to just mimic a passive benchmark.

#6

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