Which type of fund has the objective to establish an overall position that is uncorrelated with traditional asset classes?

A) event-driven
B) global macro markets
C) emerging markets
D) hedge fund-of-funds

Question

Which type of fund has the objective to establish an overall position that is uncorrelated with traditional asset classes?

A) event-driven
B) global macro markets
C) emerging markets
D) hedge fund-of-funds

Quizplus · Accepted Answer

Hedge funds-of-funds invest in other hedge funds.Rather than adopting a specific strategy,a hedge fund-of-funds seeks to diversify across a range of strategies by investing in a variety of hedge funds.Hedge funds-of-funds typically have an objective to establish an overall position that is uncorrelated with traditional asset classes.The logic is that,if each individual hedge fund through its strategy is seeking a low correlation with traditional markets,then diversifying across individual hedge funds should produce a portfolio that has even lower correlation with traditional markets.

Which Type of Fund Has the Objective to Establish an Overall