--- title: "Hedge Fund Strategies | Altss Glossary" description: "Hedge fund strategies are the families of investment approaches hedge funds use, commonly grouped as equity long/short, event-driven, relative value,…" canonical: "https://altss.com/glossary/hedge-fund-strategies" --- Glossary · Strategy # Hedge Fund Strategies Also called: hedge fund strategy types · hedge fund styles Hedge fund strategies are the families of investment approaches hedge funds use, commonly grouped as equity long/short, event-driven, relative value, global macro, managed futures, credit and multi-strategy, each with distinct return drivers, risks and liquidity needs. Publisher: Altss LLC Published 2026-06-20 Content modified 2026-10-01 ALTSS-STRUCT-031 "Hedge fund" describes a vehicle, not a strategy. Inside that vehicle managers do very different things: pick stocks long and short, trade around mergers and bankruptcies, exploit pricing gaps between related securities, bet on interest rates and currencies, or follow trends in futures markets. The strategy determines what drives returns and what can go wrong. ## No single standard classification Index providers, databases and industry bodies each publish their own strategy taxonomy, and the boundaries differ: one provider's relative value bucket can hold what another files under credit or event-driven. The families below recur across many of these schemes under varying names. When comparing data, use one provider's taxonomy consistently and read its definitions. ## The main families **Equity long/short.** Long and short positions in equities; returns from stock selection plus net market exposure. Risks: market beta, crowding, short squeezes. **Event-driven.** Positions around corporate events: merger arbitrage, special situations, activism, [distressed](https://altss.com/glossary/distressed-debt) securities. Risks: deal breaks, legal outcomes, illiquidity in distressed positions. **Relative value.** Exploiting price differences between related instruments: fixed income arbitrage, convertible arbitrage, statistical arbitrage, volatility trading. Risks: leverage, funding and liquidity shocks, model risk. **Global macro.** Directional or relative positions in rates, currencies, equity indices and commodities based on macroeconomic views. Risks: policy surprises, concentration in a few themes. **Managed futures.** Run by commodity trading advisors (CTAs). Mostly systematic, often trend-following, trading in futures and forwards. Risks: trend reversals and choppy markets. **Credit.** Long/short corporate and structured credit, capital structure arbitrage. Risks: defaults, liquidity, spread widening. **Multi-strategy.** Several strategies in one fund, often run as a platform of independent portfolio-manager teams with central risk limits. ## Liquidity follows strategy Liquid strategies (macro, managed futures, much equity long/short) typically offer monthly or quarterly redemptions with short notice. Strategies with less liquid holdings (distressed, some credit, activism) use longer [lock-ups](https://altss.com/glossary/lockup), [gates](https://altss.com/glossary/gates) and [side pockets](https://altss.com/glossary/side-pocket). Investors match redemption terms to the liquidity of what the fund holds. ## Fee models by strategy Hedge funds commonly charge a management fee and a performance fee subject to a high-water mark. Many large multi-manager platforms instead pass through expenses, including portfolio-manager compensation, so their total cost is not captured by a headline management fee; investors compare them on all-in cost relative to net returns. Fee levels vary by manager, fund size and share class. ## Strategy drift and classification risk A manager's actual exposures can move away from its stated strategy ([style drift](https://altss.com/glossary/style-drift)), for example an equity long/short fund running persistently high net long exposure. Allocators check strategy classification against holdings and factor exposures rather than relying on the manager's label. ## Not the same as - [Hedge Fund](https://altss.com/glossary/hedge-fund): Hedge fund is the vehicle and its terms; hedge fund strategies are what the vehicle does with the capital. - [Alternative Investments (Alternative Assets)](https://altss.com/glossary/alternative-assets): Alternative assets is the broad category; hedge fund strategies are one branch of it. ## Common mistakes - Treating a strategy label as a precise classification across data providers. - Assuming every hedge fund strategy hedges market risk; many run substantial directional exposure. - Quoting typical fee or exposure levels as norms; they vary widely. ## Related terms 6 terms - [Hedge Fund](https://altss.com/glossary/hedge-fund) - [Style Drift](https://altss.com/glossary/style-drift) - [Side Pocket](https://altss.com/glossary/side-pocket) - [Lock-Up Period](https://altss.com/glossary/lockup) - [Redemption Gate](https://altss.com/glossary/gates) - [Distressed Debt](https://altss.com/glossary/distressed-debt) ## Concept record Concept ID ALTSS-STRUCT-031 Classification Strategy Topics Hedge funds Version 2.0.0 Last reviewed 2026-10-01 Structured data [JSON](https://altss.com/reference/concepts/hedge-fund-strategies.json) ## Canonical URL https://altss.com/glossary/hedge-fund-strategies