A hedge fund is a pooled investment vehicle that may invest in a diverse range of markets and use a wide variety of investment styles and financial instruments to accomplish their goals. This investment flexibility, both in terms of strategies and financial instruments, unlocks unique opportunities for clients.

The term “hedge fund,” which has now become part of modern culture, refers to the “hedging techniques” that have been traditionally used in this approach. The name is mostly historical as the first hedge funds attempted to hedge against potential downside risk by shorting the market or individual securities (e.g., mutual funds generally do not enter into short positions as one of their primary tools). Today, hedge funds use dozens of different strategies with the aim of achieving performance through skill or security selection (i.e., alpha) as opposed to market direction (i.e., beta).

Hedge funds are generally available only to qualified investors and cannot be offered or sold to the general public. A hedge fund’s value is calculated, much like a mutual fund, as a share of the fund’s net asset value, meaning that increases and decreases in the value of the fund’s investment assets (and fund expenses) are directly reflected in the amount an investor can later withdraw.

Because hedge funds are typically not sold to the general public, the funds and their managers have historically been exempt from some of the regulations that encumber other funds and investment managers with regard to how the fund may be structured and how strategies and techniques are employed.

Funds of Funds

Fuller Investment Management Company and its affiliates offer a fund of hedge funds that has been available to qualified individuals and organizations for more than 25 years. A fund of funds is an investment vehicle with a portfolio that consists of investments in a number of hedge funds.

These portfolios are popular with both institutional and high-net-worth clients as an alternative to investing directly into individual hedge funds and provide access to funds that are typically not available to the general public. As a rule, funds of funds have lower minimums and are an efficient way to leverage unique and experienced resources to effectively navigate the vast and sometimes complex investment opportunities within the hedge fund industry.

One of the benefits of a fund of funds is that it enables an investor to obtain instant diversification in a portfolio of hedge funds, which is particularly attractive for an investor with a portfolio that is large enough to invest in alternative assets such as hedge funds, but too small to achieve proper or desired diversification.

A direct benefit of investing in Fuller Multi-Strategy Fund is access to experienced and dedicated portfolio management. A portfolio manager uses their experience and skill to analyze and select the best underlying funds based on a multitude of factors. A talented manager can increase return potential and decrease portfolio risk through their expertise in manager sourcing and selection, strategy allocation and negotiating and ensuring appropriate terms.

Funds of hedge funds, such as Fuller Investment Management Company’s Fuller Multi-Strategy Fund, may be appealing to investors seeking the differentiated returns and risk reduction potential of hedge funds along with the diversification benefits and lower investment minimums in a fund of funds vehicle.


Hedge funds traditionally utilize a variety of investment strategies with the goal of generating returns that are less dependent on the direction of equity, bond, commodity and currency markets. This makes them useful in diversifying traditional risk factors in an investment portfolio. Fuller Investment Management Company generally uses four established hedge fund strategies (and subsequent sub-strategies) to help clients build an appropriate portfolio.

Long-Short Equity
This is one of the most common and highly utilized strategies. It is an extension of traditional long-only equity investing, but adds the ability to sell short and to use leverage. The basis of long-short equity investing is to seek good companies or undervalued companies to buy on the long side, and poorly run or overvalued companies to sell short. By balancing long and short exposures, market risk can be hedged to the desired level. 

Credit investing is another hedge fund strategy. Though it is less common than long-short equity investing, the primary principles are similar. In this approach both undervalued and overvalued companies are selected but instead of trading in the equity of these companies, the manager buys and sells their debt. This includes bonds, convertible bonds, bank debt, trade receivables and credit default swaps.

Global Macro
This is one of the oldest and most recognized strategies. Global Macro utilizes a broad range of strategies in which the investment process is predicated on movements in underlying economic variables and the impact these have on equity, fixed income, hard currency and commodity markets. Managers employ a variety of techniques, both discretionary and systematic analysis, combinations of top-down and bottom-up theses, quantitative and fundamental approaches, and long- and short-term holding periods.

This strategy is favored by managers who maintain positions in companies currently or prospectively involved in corporate transactions such as mergers, restructurings, financial distress, tender offers, shareholder buybacks, debt exchanges, security issuance, or other capital structure adjustments. Event-driven investing brings together business valuation, legal understanding of bankruptcy processes, trading ability, and an understanding of the motivations of incumbent stakeholders, from shareholders to creditors to management.