Hedge Fund Strategy Classification Reference
Hedge Fund Strategy Classification
| Strategy | Description | Typical Leverage | Return Target (net) | Correlation to S&P 500 | Fee Structure |
|---|---|---|---|---|---|
| Long-Short Equity | Buy longs, short overvalued stocks | 1.5x-3x | 8-12% | 0.5-0.7 | 1.5/15-2/20 |
| Market Neutral | Equal dollar long/short | 2x-5x | 4-7% | 0.0-0.2 | 1/10 |
| Event-Driven | M&A, spin-offs, restructurings | 1x-2x | 7-10% | 0.4-0.6 | 1.5/15 |
| Global Macro | Top-down currency, rates, commodities | 2x-10x | 10-15% | 0.0-0.3 | 2/20 |
| Fixed Income Arb | Exploit rate spread mispricings | 5x-15x | 4-8% | 0.1-0.3 | 1.5/15 |
| Quantitative/CTA | Systematic, trend-following | 3x-8x | 8-14% | -0.1-0.2 | 2/20 |
| Multi-Strategy | Multiple concurrent strategies | 2x-6x | 8-12% | 0.3-0.5 | 2/20 |
Source: HFR (Hedge Fund Research), Preqin global hedge fund database. Last verified: September 2026.
Frequently Asked Questions
What is a hedge fund?
A hedge fund is a private investment partnership that uses diverse and often complex strategies unavailable to traditional mutual funds, including short selling, leverage, derivatives, and concentrated bets. They are typically limited to accredited or qualified investors due to reduced regulatory oversight.
What fees do hedge funds charge?
Most hedge funds charge a management fee (typically 1.5-2% of assets annually) plus a performance fee (typically 15-20% of profits). This "2 and 20" structure has moderated to roughly "1.5 and 17" industry-wide as institutional investors demanded fee concessions after years of underperformance versus passive alternatives.
Do hedge funds outperform the stock market?
Aggregate hedge fund performance has underperformed a simple S&P 500 index fund in most years since 2010 after fees. Warren Buffett's famous 10-year bet (2008-2017) saw a low-cost S&P 500 index fund return 7.1% annually vs. 2.2% for a fund-of-funds portfolio. However, some strategies (global macro, managed futures) offer genuine diversification value that return comparisons to equities do not capture.
Cite This Page
If you reference this table in your own work, use the following citation format and add the date you accessed it:
Swoopr Editorial Team. (2026). Hedge Fund Strategy Classification Reference. Swoopr Investment. https://www.getswoopr.com/tables/alternatives/hedge-fund-strategy-classification/
Check the figures against the primary sources listed under References before you rely on or republish them; the series they come from are revised.