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Investment Style

Aggressive Growth
Aggressive growth investors employ an extreme version of the growth style. This can be seen by their propensity to hold the stocks of companies that are growing their revenue and EPS extremely quickly, are in an early stage of their life cycle, or have minimal or no current earnings.
Broker Dealer
BrokerDealers are usually trading facilitators rather than investors. Included in this group are sellside research firms with broker operations, NYSE and NASDAQ trading desk positions of investment banks, investment banking client desks that execute buyback programs on behalf of corporations, private client firms that essentially act as custodians for high net worth individuals, and brokers that sell unit investment trusts or exchange traded products.
Core Growth
Core Growth managers typically invest in mid or large capitalization, blue chip companies that have historically performed near the top of their sector or the S&P 500 in terms of profitability, earnings growth, and revenue growth. These investors are often willing to pay premium P/E multiples for highly sustainable businesses, strong management and consistent growth over the long term.
Core Value
Core Value investors focus on buying companies at relatively low valuations on an absolute basis, in relation to the market or its peers, or in comparison to an individual stock's historical levels. These portfolios typically exhibit price–to–earnings, price–to–book and price–to–cash flow multiples below the S&P 500. In addition, secular revenue growth rates of the companies in these portfolios are frequently below market averages and their earnings tend to be more cyclical.
Deep Value
Deep Value investors employ a more extreme version of value investing that is characterized by holding the stocks of companies with extremely low valuation measures. Often these companies are particularly outoffavor or in industries that are outoffavor. Some investors in this category are known for agitating for changes such as new management, a merger, or the spinoff of a subsidiary.
Emerging Markets
These investors focus primarily on companies in the developing economies of Latin America, the Far East, Europe, and Africa.
GARP
GARP investors try and build their portfolios with two types of securities: 1.) Those that are trading at a discount to the market or their peers yet are expected to grow at higher than the market average or their peers; and 2.) Those whose forward P/E ratio is less than, equal to, or only slightly above the long term projected growth of the company. Stated another common way, GARP investors will often say they are either looking at largecap stocks whose PEG ratio (forward P/E divided by five year projected growth) is less than the S&P 500 or at any sized company whose PEG ratio is less than 1. This is a more conservative investment style in comparison to an outright growthoriented strategy. In addition, dividend yield is generally not a concern of most GARP investors.
Growth
Growth investors bridge the gap between the Aggressive Growth and Core Growth investment styles. They tend to be slightly more aggressive than Core Growth investors, willing to pay slightly higher multiples for stocks and trade at a slightly more active pace. In general, they are looking for companies growing at superior rates than the general marketplace, but are unwilling to pay the extremely high multiples associated with the hyper growth stocks.
Hedge Fund
Hedge Fund investors have the majority of their funds invested in some sort of market neutral strategy. Notably, the term 'hedge fund' is both a legal structure (as opposed to a mutual fund) and an investment style. Nearly every firm that uses a hedge fund or market neutral style is legally organized as a hedge fund (and thus only opens to accredited investors). Many are offshore funds that are unregistered, have no investment limitations, and are not subject to disclosure regulations. The common element is that any long position taken in a specific equity is offset by a short position in either a merger partner (risk arbitrage), an 'overvalued' member of the same sector (long/short paired trading), a convertible bond (convertible arbitrage), a futures contract (index arbitrage) or an option contract (volatility arbitrage). Because of the idiosyncratic nature of these investors, the fundamentals of their portfolios are not indicative of their investment styles. Thomson Financial categorizes these portfolios based on its specific knowledge of the their historical investment behavior.
Income Value
Income Value investors are similar to those in the Core Value category except they are as interested in the dividend yield as they are in the low valuation ratios of the stocks they purchase. As a result, Income Value portfolios typically exhibit above average current income and low P/E ratios
Index
Index investors generally create portfolios that are designed to match the composition of one or more of the broadbased indices such as the S&P 500, the Russell 1000/2000/3000, the Wilshire 5000, or the NASDAQ 100. Therefore, the performance and risk of the portfolio mirrors a section of the broader market. Their investment decisions are driven solely by the makeup of the index that is tracked rather than by an evaluation of the company and its business prospects. As a result, Index firms are often referred to as Passive investors. Thomson Financial categorizes these portfolios based on its specific knowledge of their historical investment behavior.
International
This style refers to those money managers investing the majority of their equity assets in stocks of companies domiciled outside of North America. In most cases, the North American portion of the portfolio is either too small or does not exist, precluding Thomson Financial from determining an accurate investment style based on the fundamentals of these companies. For "Global" investors which have more significant North American holdings, a specific style may be given which will apply primarily to the North American portion of the portfolio.
Momentum
Momentum institutions invest in stocks whose price, earnings, or earnings estimates are advancing at a faster rate than the market or other stocks in the same sector. Momentum investors generally look for stocks experiencing upward earnings revisions or producing positive earnings surprises. Most of the investors in this category have relatively high portfolio turnover rates due to a shortterm (often quarterly) focus, and therefore will liquidate positions at the slightest hint of a disappointment or deceleration in earnings. Thomson Financial categorizes these portfolios based on its knowledge of their historical investment behavior.
Sector Specific
Sector Specific investors have the majority of their assets in a single major industry category. Many times these investors are "forced" to own most if not all of the stocks in a given sector whether or not they are deemed appropriately valued. Since their portfolio exposure is linked to a single sector, their performance is usually measured against an index that is pertinent only to that industry. As such, tweaking the relative exposure to the companies that constitute a given sector will determine these firm's investment decisions.
Specialty
This category encompasses a range of styles that are not based on the fundamentals of the stocks in the portfolio relative to the overall market. Examples include investors that hold a particularly high concentration of a single stock or a very small set of stocks, or specialize in convertible securities. This category is also reserved for any institution or mutual fund that does not meet the criteria for any of the other investment styles. Thomson Financial categorizes these portfolios based on its specific knowledge of their historical investment behavior.
VC/Private Equity
Venture Capital and Private Equity investors are usually owners of public companies only when they have participated in a round of financing prior to an IPO and subsequently retained ownership after the transition from a private company to a public company. Other investors often consider positions held by venture capitalists as an "overhang" on the stock of a publicly traded company since VCs will typically dispose of their holdings of public companies during the first few years following an IPO.
Yield
Yield investors typically focus on buying companies with indicated dividend yields that are comfortably above the S&P 500 average and that are perceived to be able to continue making or increasing dividend payments over time. Investors that fall into this category tend to focus on income and safety more than on capital appreciation, and many have a dividend yield "hurdle rate" below which they will be either unlikely to consider owning a particular stock or forced to pare back a current position.

Hedge Fund Styles

Arbitrage

Convertible Arbitrage
Hedge fund managers in this category construct long portfolios of corporate convertible securities, such as convertible bonds, convertible preferred stock, and warrants, and hedge the equity element of these positions by selling short some portion of the common stock into which the convertible securities may be converted.
Fixed Income Arbitrage
This trading style describes a wide variety of strategies involving fixed income securities. Hedge fund managers attempt to exploit relative mispricing between related sets of fixed income securities. The generic types of fixed income hedging trades include: yield curve arbitrage, corporate versus Treasury Swap yield spreads and cash versus futures.
Capital Structure Arbitrage
This strategy exploits the pricing inefficiencies that exist in the capital structure of the same issuer. An example is going long on a high yield bond and shorting the stock of an issuer, to hedge the equity risk component of the high yield bond.
Statistical Arbitrage
This strategy profit from pricing inefficiencies identified through the use of mathematical models.

Event Driven

Merger/Risk Arbitrage
The strategy invests in eventdriven situations such as leveraged buyouts, mergers and hostile takeovers based on capturing the benefits driven by an announced, but not yet consummated, transaction. For example: taking a long position in the stock of a company being acquired in a merger, leveraged buyout or hostile takeover and simultaneously taking a short position in the stock in the acquiring company.
Distressed Securities
Buying and occasionally shorting securities of companies where the security's price has been, or is expected to be, affected by a distressed situation. This may involve reorganizations, bankruptcies, distressed sales and other corporate restructurings.

Equity

Long / Short
This strategy seeks to achieve absolute capital appreciation by investing in equity securities. The risk associated with long investment positions is reduced by taking short positions in securities that are thought to be overvalued.
Long Bias
This strategy is similar to a mutual fund, except the manager can trade a variety of financial instruments and use leverage.
Short Bias
In this strategy a manager consistently maintains a net short exposure to the market.
Market Neutral
Invests in long and short equity positions. Neutrality can be established in terms of dollar exposure, beta exposure, exposure to sectors, industries, market capitalization, interest rate sensitivity, and other risk factors.

Global

Macro
This strategy employs an opportunistic approach attempting to capitalize on global macroeconomic trends across markets and sectors. This approach is primarily based on economic analysis and forecasts of shifts in interest rates, currencies, equities and commodities, as well as monetary and other public policy developments.
Emerging Markets
Emerging market hedge funds focus on equity or fixed income investing in emerging markets as opposed to developed markets. Emerging markets investors generally have a strong long bias.

CTA/Managed Futures

CTA/Managed Futures
Generally trade commodity futures, financial futures, options and foreign exchange and most are sometimes highly leveraged. Traditional CTAs or trend followers attempt to capture a term trend across a range of markets.

MultiStrategy

MultiStrategy
Investment approach is diversified by employing various strategies simultaneously to realize shortand longterm gains.

Fund of Funds

Fund of Funds
A hedge fund which invests in other hedge funds. Funds of funds can invest in multiple managers of a single strategy or multiple strategies.