Wednesday, October 9, 2019

Asset Pricing Essay Example | Topics and Well Written Essays - 250 words

Asset Pricing - Essay Example The Modus operandi of the Hedge Fund has also been described to be different from other forms of funding i.e. mutual funds owing to the fact that it involves an investment in liquid assets, provision of leverage (Tran, 2006). Moreover, economic research has determined that the Hedge Fund operates in a dynamic and diverse market through various financial instruments and modes of investment. In this regard, the name the Hedge Fund was arrived at taking into consideration the hedging styles that were earlier applied. However, the current modes of operation of the Hedge Funds do not necessarily involve the use of hedging methods (Tran, 2006). Currently there are two main types of the Hedging Funds, they include: â€Å"The Credit Suisse Equity Market Neutral Hedge Fund Index† and the â€Å"Credit Suisse Global Macro Hedge Fund Index†. ‘Credit Suisse Equity Market Neutral Hedge Fund Index’ has been described as a sub-branch of the Hedge Fund Index that has facilitated efforts of measurements directed towards determining the level of performance ascribed to Equity Neutral Funds. Moreover, it is perceived as a benchmark for asset-weighing process (http://www.managedfunds.org/hedge-fund-investors, n.da). The Corpus of Credit Suisse facilitated the development of a wide range of innovative strategies for asset-weighing such as the investable indices as well as investment tracking portfolios. On the other hand, the ‘Global Hedge Fund Macro Hedge Fund Index‘ is a sub-branch of the Credit Suisse Hedge Fund Index that is applied to assess the global performance of funds on macro level. The concept of Global Macro-funds involves a focus directed towards identification of extreme price values through the application of a leverage approach. The leverage approach is specifically applied to project the movement of prices, currency, commodity markets as well as the rates of interests (Milner, 2001). Most investors of the global hedge fund

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