Hedge Fund Investment Strategies In China's Stock Market Research

With the increasing efficiency of pricing in financial markets and the changes ofinvestment environment, traditional financial instruments can not meet investors’ demandfor return. With the varieties of investment strategies, professional investment technologiesand different financial investment instruments, hedge fund are particularly noted by people,it meets the individual investors and institutional investors diversified demands. Judgingfrom the hedge fund performance, its，rate of return is significantly higher than the mainmarket index during the rising phase of the market and its volatility of its earnings is lessthan the market index during the fall the market, so it shows that hedge funds caneffectively diversify the investment portfolio’s market risk. Hedge funds have grownrapidly overseas, and research in this area is relatively mature, while the domestic hedgefund has just started. Stock index futures, security financing and other introductions ofshort mechanisms may promote the development and innovation of hedge funds in thedomestic market.In this paper, we discuss about the feasibility of international hedge fund investmentstrategies in China’s stock market using quantitative and qualitative methods, providingadvices to domestic investors. Firstly, paper introduces the basic theories about operationof hedge funds, improvement process of international hedge funds and the latest features.Secondly, we research hedge fund investment strategies from all aspects and then do someempirical study in China’s stock market combining with international hedge fundinvestment strategies.Lastly we conclude advices about how to develop our own hedgefund in domestic market.