Factor investing breaks down what truly drives stock returns and separates systematic exposure from manager-generated alpha. This post explains how hedge funds use factor models to measure alpha, manage risk, and construct balanced portfolios.

Hedge funds with the highest AUMs have shifted to the "pod" model. Pods are fund platforms that allocate their investors' capital to a large number of portfolio managers which make individual investment decisions. From an investment management perspective, each pod effectively functions as a self-contained business unit which trades based on its own research and strategy and manages its own P&L.