market-neutral investing

Market-Neutral Investing

An investment strategy in which one seeks to make the same return regardless of the performance of the broader market. There is no single way of executing a market neutral strategy, but it usually involves taking a combination of long positions and short positions. For example, one may take a long position on one index while also taking a short position on a similar but not identical index. Market neutral investing may also involve some form of arbitrage.

market-neutral investing

An investment strategy of attempting to assemble an investment portfolio with a return that is unaffected by returns in the overall market. For example, an investor might buy shares of a petroleum company the investor considers undervalued and sell short an equal value of shares of a different petroleum company the investor considers overvalued. The investor expects to profit regardless of whether the overall market rises or declines. Market-neutral investing utilizes hedging in an attempt to profit from market inefficiencies.
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The paper, A Timely Look at Market-Neutral Investing from the Client Perspective, written by Kathleen DeRose, CFA and Nathan Lee, CFA, is now available in full on the firm's website, haginim.
SSI considers itself to be the pioneer of market-neutral investing, having managed market-neutral portfolios for over 35 years.
Contents contained inside the book include: Part I: Introduction Chapter 1: Alternative investment strategies: an investor's viewpoint Part II: Private equity and venture capital Chapter 2: Private equity investing Chapter 3: Venture capital: an overview of the European industry Part III: Skill-based strategies Chapter 4: Market-neutral investing Chapter 5: Multi-manager products and institutional investors Chapter 6: Managed futures: a growth area Chapter 7: The strategic case for commodities Chapter 8: Managed currencies: a powerful alternative investment strategy Chapter 9: Capturing diversified alpha from the global currency markets Part IV: Hedge fund performance and risk management