Event Driven ??

Discussion in 'Strategy Development' started by BlueHorseshoe, Feb 3, 2006.

  1. Anyone have experience trading at an 'event driven' hedge fund?? Or hiring/evaluating/broking them?

    I'm trying to get a handle one what 'event driven' actually means. (My suspicion is that it means whatever the particular fund manager wants it to mean.)

    If someone has experience pursuing this strategy on behalf of institutional or HNW clients, pls share your experience. What events were you trading? Were you sitting on cash a good part of the time?? Used lots of exotic derivatives like default swaps??

    Here is a definition I came across on the web:

    "As the name implies, hedge funds employing an event driven strategy take positions based upon their expectations about some event that has or is expected to occur. The definition of an “event” ranges from an earnings announcement or press release issued by a company to non-economic or financial matters such as political or general world events. While there are no restrictions in terms of geography or what markets are traded most event driven funds tend to focus on a particular region, country, or market as covering financial markets as a whole can be a difficult task. As with global macro funds it is difficult to define event driven funds by one risk/return profile as an event driven strategy can be very aggressive, employing derivatives and leverage, or excessively conservative. However, typically both risk and returns tend to be higher then the norm as the success of an event driven funds rests upon the manager(s) ability to read an event situation accurately or employ a model which is capable of doing such a task. Event driven funds can sustain correlations with the major market indices as predefined "events" can become more scarce during times of range-bound markets and volatile environments can lead to large losses or equally large gains. However, the potential does exist and many funds advertise as a key feature, their market neutrality in being able to offer returns irrespective of the market environment."

    (Posers pls abstain from posting here - I'm really only interested in hearing from those that have professional exposure/knowedge on the subject.)