Hedge funds offer qualified investors a unique partnership. While hedge funds first began as a way to offer investors a balanced – or market-neutral – approach to investing, the methods have evolved through the years. This presentation focuses on one of those strategies, relative value.

1. Hedge Fund Strategies 101:
Relative Value
Hedge Fund Fundamentals | January 2015

2. 2
Introduction
Hedge funds offer qualified investors a unique partnership, with the ability to invest
alongside them.
While hedge funds first began as a way to offer investors a balanced - or market-neutral –
approach to investing, the methods for delivering returns have evolved through the years.
This presentation provides a brief overview of some of the strategies used by hedge funds
in the marketplace today.
Topics:
• Investment Strategies
• Relative Value
• New Hedge Fund Partnerships
• Resources

3. 1
3
Hedge funds offer investors a broad range of investment options. No two
hedge funds are identical, but funds can be categorized broadly by the
type of strategies they employ.
While the individual investment decisions made by each fund vary, hedge
funds are united by the same fundamental goals:
• Portfolio Diversification- Prevents over-concentration in specific assets.
• Risk Management – Helps anticipate and avoid volatility in the marketplace
• Reliable Returns Over Time – Provides opportunities for asset growth
Investment Strategies

4. 2
4
Relative Value
Investment managers maintain positions based on valuation discrepancy in the
relationship between multiple securities.
Managers employ a variety of fundamental and quantitative techniques;
investments range broadly across equity, fixed income, derivative or other
security types.
Positions may involve future corporate transactions, but these positions are
predicated on realization of a pricing discrepancy between related securities
rather than the outcome of the corporate transaction.
According to the 2014 Preqin Report on Hedge Funds relative value strategies
represent 13% of assets accompanied by industry funds.
Source:2014 Preqin Global Hedge Fund Report

5. 3
5
Institutional Investors Seeking Out New Hedge Fund
Partnerships
According to Preqin’s 2014 Global Hedge Fund
Report, investors expect to increase hedge fund
allocations to their existing portfolios over the
next 12 months.*
Beyond multi-manager funds, public pension
funds are the most active type of institutional
investor seeking new hedge funds, with the
proportion of the total number of fund mandates
issued by this group rising throughout the year.
This is in line with recent growth trends, which
indicate that in 2007, around 196 public pension
funds invested in hedge funds - today that
number is around 377.
The accompanying chart outlines how investors
are expected to allocate – by strategy – over the
next 12 months.**
Source: 2014 Preqin Global Hedge Fund Report
**Data for 2015 will be updated as soon as published.

6. 4 Resources:
6
For more information on hedge fund strategies, visit:
1. Managed Funds Association or www.managedfunds.org
2. Hedge Funds 101
3. Hedge Fund Strategies: An Overview of the Various
Investment Strategies Offered by Hedge Funds in the
Marketplace Today
4. Hedge Fund Research Strategy Definitions