Archive | October 2013

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Fund of Hedge Funds, Manager Selection, and Due Diligence

One of the main reasons that more and more institutional investors, particularly endowments and foundations, include hedge funds in their portfolios is the expected diversification benefit, given the existing array of investment opportunities. In the U.S., these institutions are still increasing their strategic allocation to hedge funds, despite the fact that hedge funds as a […]

An Event-Driven Strategy: Merger Arbitrage

Event-driven strategy seeks to invest in opportunities associated with corporate transactions such as consolidations, acquisitions, recapitalizations, bankruptcies, and liquidations. Merger arbitrage event-driven managers employ strategies that can capitalize on valuation inconsistencies in the market before or after mergers and acquisitions deals, and take positions based on the predicted movement of the underlying securities. Mergers can […]

A Relative Value Strategy: Convertible Arbitrage

Hedge funds deploying relative value strategies seek to take advantage of “discrepancies” in price between securities or the overall market. Within the relative value category, there are sub-strategies, and convertible arbitrage is an important form of relative value strategy where hedge fund managers exploit pricing inefficiencies between convertible securities and the underlying stocks. Under normal […]

A Global Macro Strategy: Managed Futures

  Hedge funds utilizing a global macro strategy take positions in equity, fixed income, or currency markets in anticipation of global macroeconomic events to generate risk-adjusted returns. Global macro fund managers rely on the “big picture” or trends to identify investment opportunities and profit from anticipated price movements. There are sub-strategies within global macro strategies, […]

Hedge Fund Landscape

The first hedge fund emerged in 1949 when sociologist Alfred Winslow Jones and his four friends formed an investment partnership. The first reference to a hedge fund appeared in a 1966 Fortune article by Carol Loomis. Ms. Loomis wrote the story of Alfred Jones in The Jones Nobody Keeps Up With, little did she know […]

Impact Investing – The Next Generation of Venture Capital

In the 1990s, Jed Emerson advocated the concept of Blended Value for funds, firms, social ventures, and foundations to invest with social and environmental impact, rather than to maximize financial performance. Simultaneously, approaches such as pollution prevention, corporate social responsibility (CSR), and triple bottom line or the “three pillars” (people, planet, and profit) began to […]

Private Equity Portfolio Management

Portfolio Management is a process of making investment decisions about asset mix, policy, and buy/sell disciplines in order to meet individual and institutional investors’ specified financial objectives, risk tolerance, investment horizon, and the optimize the risk-return relationships. Since 1952, Markowitz’s basic principles of portfolio construction, which were published in the Journal of Finance, have been […]