Magnum,
Your financial advisor is a salesman first and foremost. I understand that you aren't comfortable managing all of your investment/trading capital, and I think a financial advisor who offers low fees while helping you to determine and achieve investment objectives via passive portfolio allocation is reasonable. Under no circumstances should you consider your financial advisor a trader or active portfolio manager and as such do not let him do things that these people would. If he is your run of the mill broker, the extent of his knowledge on hedge funds and the strategies they are running is limited to what is written in the Journal, what he heard on CNBC, or what colleagues, that have a friend of a friend who worked in the back office reconciling trades of a high frequency quant fund, told him.
If you are interested in active trading/investing, you'll need to tackle this by yourself. If you aren't looking to devote countless hours and money to learning though(and even if you are!), it probably isn't worth it. You'll do best by learning the ins and outs of passive allocation.
To address your original question, the hedge fund universe is enormous. The general public has referred to strategies as "advanced" or "complex" when in reality this may just refer to the fact that hedge funds short stocks in addition to being long, unlike long-only mutual funds. This is not complex at all. I believe long/short equity hedge funds are the most common type of fund currently, but I may be mistaken. There are other fundamentally and macro driven strategies I'll leave out for now. Quantitative funds are growing rapidly, but many of them are running very simple strategies based on some BARRA factors or other fundamental data that can be mined, backtested, and optimized. Again, this is made to sound complex, but the core is not at all. Some are running extremely high-frequency trades, but my current understanding is that the most successful systems doing this are running extremely simple market making strategies, capitalizing on economies of scale(low commissions) and powerful technology(you know supercomputers, fiber connections, etc). Others may be trend following, using programmed rules defined by technical/statistical analysis. And then there's always chatter about funds doing wild stuff, speculation about the use of artificial intelligence, genetic algorithms, crazy maths for pricing models, etc. But if we are making generalized statements, then I think it's fair to say that most strategies are simple.
Your financial advisor is a salesman first and foremost. I understand that you aren't comfortable managing all of your investment/trading capital, and I think a financial advisor who offers low fees while helping you to determine and achieve investment objectives via passive portfolio allocation is reasonable. Under no circumstances should you consider your financial advisor a trader or active portfolio manager and as such do not let him do things that these people would. If he is your run of the mill broker, the extent of his knowledge on hedge funds and the strategies they are running is limited to what is written in the Journal, what he heard on CNBC, or what colleagues, that have a friend of a friend who worked in the back office reconciling trades of a high frequency quant fund, told him.
If you are interested in active trading/investing, you'll need to tackle this by yourself. If you aren't looking to devote countless hours and money to learning though(and even if you are!), it probably isn't worth it. You'll do best by learning the ins and outs of passive allocation.
To address your original question, the hedge fund universe is enormous. The general public has referred to strategies as "advanced" or "complex" when in reality this may just refer to the fact that hedge funds short stocks in addition to being long, unlike long-only mutual funds. This is not complex at all. I believe long/short equity hedge funds are the most common type of fund currently, but I may be mistaken. There are other fundamentally and macro driven strategies I'll leave out for now. Quantitative funds are growing rapidly, but many of them are running very simple strategies based on some BARRA factors or other fundamental data that can be mined, backtested, and optimized. Again, this is made to sound complex, but the core is not at all. Some are running extremely high-frequency trades, but my current understanding is that the most successful systems doing this are running extremely simple market making strategies, capitalizing on economies of scale(low commissions) and powerful technology(you know supercomputers, fiber connections, etc). Others may be trend following, using programmed rules defined by technical/statistical analysis. And then there's always chatter about funds doing wild stuff, speculation about the use of artificial intelligence, genetic algorithms, crazy maths for pricing models, etc. But if we are making generalized statements, then I think it's fair to say that most strategies are simple.
