George Soros is probably one of most well known hedge fund investors. His investment firm Soros Fund Management is reported to be one of the most profitable hedge fund firms in the world. Certainly, a careful analysis of Soros funds can give a basic idea about the company’s investment strategies. Investors can pick up these tips and tricks, perhaps implementing them while working on their own investments.
Soros funds are particularly interesting for investors because of its successful investment strategy. The fund has compounded its revenues at 26.3% for 41 years, from 1969 to 2009. This huge revenue turn-over can be attributed to the diversification strategy and flexibility. What is the strategy?
George Soros is widely known to depend on what he terms as reflexivity. Reflexivity is actually based on the idea that personal and epistemological biases can indicate the performance of the economy. Using this view, investors can have an idea of the value of the assets in a particular market. Soros utilizes this strategy to predict financial bubbles and other economic trends.
However, it takes considerable years of experience and expertise to effectively capitalize on the benefits of reflexivity. The investment strategy requires investors to be confident about their investment decisions based on the concept. That means, if you invest in Intuit stock, you can not get cold feet and sell after a week. There should be a deep underlying investment strategy at work. Therefore, it can be very risky for novice investors without the necessary skills or experience to execute the strategy successfully.
On the other hand, if done correctly, reflexivity can provide one with some of the biggest investment profits. Soros became famous as the “man who broke the bank of England” by effectively predicting the devaluation of British pounds and the consequent rise in British stock prices. By analyzing the Soros funds, investors can observe the way Gorge Soros integrates his investment philosophy into the markets.
An overview of the Soros Fund would provide investors with considerable information about its investment strategies. The Soros fund is particularly diversified with about 23.4% portfolio weightings in the technology sector. The other sectors that are predominant include basic materials, consumer defensive, energy and communication services. Additionally, Time Warner, Facebook, Monsanto, Charles Scwhabe and others are some of the notable companies that the fund invests in. In total, the Soros funds portfolio value is estimated at $11B with daily returns at 0.73%. The funds’ success lies in its diversification strategies which include 228 holdings and account for an average market capitalization of $17B. Certainly, investors can get an idea of what sectors and companies the fund is interested in.
Soros Fund Management Developments
In most recent news, the Soros fund double its share put on the ETF. Previously, the company put was set at 1 million shares. Now, that number has reached 2.1 million. If you do not know what a put option is, read our post on stock market vocabulary for beginners. Put options have, in the past, been indicative of a particular stock taking a dive sometime in the near future. However, that does not mean bad news for investors looking into the possibility of a Soros fund investment. Why? As you know, when stocks take a dive, that is the best time to buy. And since you are researching Soros Fund Management, you are probably considering an investment with the fund. So this spells good news for prospective investors, as it allows you the ability to buy low and, hopefully, sell high.
Lastly, Soros funds provide an insight into the quite complex world of hedge fund investing. However, investors need to know the importance of careful planning before implementing any investment strategy, including an endowment fund. Therefore, it is necessary to weigh individual investment goals, funding capital and risk coverage before investing with a strategy like Soros funds.
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