Hedge Fund Management: Risk Management and Strategies

Hedge Fund Management involves overseeing and making decisions to ensure hedge funds perform positively. A hedge fund manager can either be a person or a firm involved in the management of these funds. The term is, however, used to frequently refer to firms.

Hedge fund management firms employ a wide range of techniques. The strategies may vary from one investment manager to another. To ensure the success of funds under its care, a firm providing hedge fund solutions will employs several portfolio managers. This enables the firm to benefit from the unique techniques employed by each of them. Citadel is an example of a successful firm in this field. It was founded by Ken Griffin on businessinsider in 1990. The firm was originally called Wellington Financial Group and was rebranded to Citadel in 1994.

Ken Griffin debut into hedge fund field in 1987 while he was a Harvard student. He set up his first fund armed with $265,000 in capital, a telephone, a personal computer, and a fax machine in his Harvard dorm room. His ambition and focus enabled him to raise almost $1 million in a few months. This caught Frank Meyer’s attention who hired him to join Glenwood Partners.
Kenneth Griffin has been the CEO of Citadel since it was founded in 1990. His visionary leadership and expertise in finance has seen the company become successful. He holds an economics degree from Harvard University and is currently 46 years old. Ken Griffin’s $150 million donation to Harvard University is the largest donation from an individual the university has ever received.

Firms managing hedge funds are known for their thorough risk management. Investment Bankers employed by these firms are involved in frequent analysis of the market to identify risks that may affect investments under the firms’ management. These experts enable the firms to capitalize on opportunities available in the market and improve returns from investments.
These companies have the culture of disciplined risk management and estimation deeply rooted in their investment strategies. To enhance the culture of risk management, they have analytics which have been professionally designed to identify, measure and manage market risks. The firms also ensure their portfolio managers develop deep understanding of their portfolios to enhance their performance.

Hedge fund managers believe on research. Their strategies are developed based on research done by experienced professionals in a wide range of financial markets. Before a research can be used as a strategy, a firm adjusts and adapts the research to its portfolios enabling it to come up with quality strategies. Hedge fund managers offer their clients services in fixed income and macro, equities, credit, commodities, and quantitative strategies.

These firms continuously develop innovate solutions to attract more investors and satisfy their investment needs. They are spread worldwide and cater for both retail and corporate clients. Investors are encouraged to invest through these firms to minimize their exposure to market risks.