Event driven

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Event driven

In the context of hedge funds, a style of management that combines many different types of hedge fund investing such as merger arbitrage, distressed securities and high yield investing, in conjunction with an important "event" that is supposed to unlock firm value (like a merger announcement, earnings announcement, or a regulator decision).

Event Driven

In hedge funds, an investment strategy of using many different investment strategies in reaction to various events. For example, if a merger is announced, a hedge fund may conduct transactions according to one strategy and, if the merger falls through, the fund may make transactions using a completely different strategy. The idea behind an event driven strategy is to use the best investment strategy befitting a particular moment in time.
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Mirabaud has allocated more to event driven strategies investing in merger and acquisition deals in the US and Europe, which has a low co-relation to markets.
"Event Driven strategies posted strong performance with the HFRI Event Driven Index gaining +2.0 per cent for the month, driven by record corporate bond issuance, successful IPO issuance and increasing investor risk tolerance.
Hedge funds posted their 7th consecutive monthly gain in May and the 11th gain in the last 12 months as strong performance in Equity Hedge and Event Driven strategies offset weakness in Macro and CTA strategies, according to data released today by HFR.
Hedge funds follow global macro, directional and event driven strategies. Private equity firms receive their return on investments through Initial Public Offerings (IPO), sale, merger or recapitalization"
Continuing trends from the previous three quarters, investors withdrew capital from both Equity Hedge and Event Driven strategies in 3Q12, with these experiencing $5.2 and $1.3 billion in net redemptions, respectively.
In the last 12 months, the number of Asian hedge funds which focus on Event Driven strategies increased to nearly eight per cent of the Asian hedge fund industry; over half of which specialise in Activist and Distressed strategies.