When one delegates money to a fund, especially to a hedge fund, one always wants to understand what strategy the money manager follows. Sometimes this information is provided to the fund’s investors; however, more often this is a secret because of the tradeoff between the trade secrecy and transparency of the fund’s activity. This is a sort of commercial secret hedge funds depend on. The third quarter will soon show its results, and hedge funds will provide investors with the final returns earned. The previous year was so unstable, and very few large funds were able to generate money for its clients. The most interesting question is: “What is the best strategy? Which investments have been giving the biggest returns? And what is the trend now?” We compare the financial results of 1,363 hedge funds, which, according to Bloomberg, have demonstrated the biggest total return in the previous calendar year and try to explain them. Two bar charts below illustrate a distribution of hedge funds by investments strategy and their respective sizes. As we can see, the majority the funds use the “long-short” strategy and the “Multi strategy”. What is even more interesting is that investors are really willing to give these funds astonishing amounts of money. (Source: Bloomberg) Let us analyze the investment results provided by the hedge funds in the recent year. We took an average return of each strategy holder and ranked it from the highest to the lowest. The results are in the table below: The results are astounding: funds with approximately 1% of the total industry’s capitalization earn adequate profits (taking into account that many economies are in recession nowadays): +7% for the “Short Biased” strategy and +5.7% was gained by “Distressed Securities” category. The most favorite strategies for the hedge fund investors and owners provide negative earnings for its clients: -2.7% in the “Multi Strategy” category and -4.6% in the “Long-Short” strategy. We can figure out that half of hedge fund investors lost more than 3.5% during the 2015. To sum up, the strategies that have earned at least some return are: “Short Biased”, “Distressed Securities”, “Emerging Market Debt”, “Asset-Backed Securities”, “Fixed Income Arbitrage”, and “Merger Arbitrage”. We do not suggest that you follow these strategies with your money because the past results are not necessarily repeatable in the future. However, it is often useful and helpful to compare different strategies in order to enhance own returns. In addition, based on the example we have just provided, the common rule for any market is to never follow the crowd. Many times good investing strategies are missed by the majority of investors, so keep your nose to the wind.