CFA Level I · CFA Level I Exam · Alternative Investment Features, Methods, and Structures
A fund invests in commodity futures contracts and also takes positions in currencies and interest rates using a systematic, trend-following model, with leverage and short selling. Which alternative investment category does it most likely belong to?
The fund most likely belongs to hedge funds. Systematic trend-following across futures in commodities, currencies and rates, using leverage and short selling, is a hedge fund strategy. Holding futures is not direct ownership of physical natural resources, and it is not private equity or private debt.
- AHedge fundsCorrect
- BNatural resources
- CPrivate capital
Explanation
Systematic trend-following (managed futures/macro) with leverage and shorting across futures is a hedge fund strategy. It holds derivatives, not physical natural resources, and is not private equity or debt.
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