Equity Strategies
Overview
Equity strategies can be some of the most complex strategies within the trading universe. This is due to the fact that
there is much more relevant information about an equity than about other asset classes. This mostly comes from
the financial statements of the firm.
Strategies
Equity strategies can generally be broken into a set of broad categories. Many of these strategies can be
cast in a form consistent with the
Arbitrage Pricing Theory
Implementation
Most equity funds will implement their portfolio bets within a set of
constraints.
Typically, constraints are used becusae the manager has a skill set consistent with the stated constraints, and they
provide direction and re-assurance to potential clients as to what to expect from the fund and the types
of risks that it will take.
Benchmarking and Risk Constraints
Many portfolios put risk constraints on the portfolio beyond just the types of instruments that it
invests in. This can be helpful for fund of fund managers who are building a portofolio that
conforms to their own target risk allocations.
