CFA Level I · CFA Level I Exam · Hedge Funds
Which feature of managed futures funds most likely makes them attractive to investors seeking diversification in a portfolio of equities during equity market crises?
Managed futures funds are attractive diversifiers because they can take short positions and profit from sustained downtrends, which can offset equity losses during crises. They do not offer guaranteed returns, and they trade liquid futures rather than investing heavily in private equity.
- AGuaranteed returns from fixed income arbitrage
- BAbility to take short positions and profit from sustained downtrendsCorrect
- CLow correlation arising from heavy investment in private equity
Explanation
Managed futures funds can go long or short liquid futures, so sustained equity declines can produce gains, giving crisis diversification. They offer no guaranteed returns and do not invest heavily in private equity.
Did you get it right without looking?
One question tells you little. A timed set on Hedge Funds shows your real accuracy, how long you take and where you lose marks.
More Hedge Funds questions
- Compared with merger arbitrage, a distressed securities strategy is most likely to involve:
- Compared with a fundamental long/short equity fund, an equity market neutral fund that uses quantitative models is most likely to:
- A hedge fund buys a convertible bond and simultaneously sells short the issuer's common stock in a ratio intended to neutralize equity price…
- A hedge fund sells short shares of companies it believes are overvalued because of aggressive accounting. The fund holds almost no long posi…
- A relative value fund earns a 1.5% annual spread on a market-neutral position by using leverage of 8 times its equity capital, and borrowing…
- A hedge fund manager specializes in the healthcare sector, taking long and short positions in drug developers and device makers based on bot…