Advanced Alternative InvestmentsThis advanced course gives an investment approach for evaluating the opportunities and pitfalls of alternative investments. Alternative investments generally include real estate, hedge funds, venture capital, private equity, commodities, as well as some other specialized areas. While this course covers some of the basics, it revolves around examples and discussions in class in order to enrich the knowledge of this topic. It is expected that students already have familiarity of introductory finance topics. Students are expected to participate in class examples and discussions. |
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| Financial analysts, individual investors, asset allocators, auditors, high net-worth managers, specialists and financial planners. |
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| No advance preparation required. |
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| Basic knowledge of the capital markets. Use of Excel and a financial calculator would be useful. |
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| Portfolio Management ProgramHedge FundsStructured Products SuiteConvertible Bonds |
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Day 1Overview of Alternative Investments- Traditional investments - types compared to alternative investments
- Manager tricks in enhancing returns and investor traps in evaluating alternative investments will be done in each section
- Mark to market accounting
- Size and growth of industry characteristics of alternative investments
- Alternative investments - types. The most common and comments on more specialized ones
- Alternative investments - role in modern portfolio theory
- Special risk measures beyond first and second movements such as return, standard deviation
- Skewness, kurtosis, correlation, covariance issues
- Performance tricks
- Statistical issues such as VARs and probability modeling as pertinent to alternative investments
- Creating optimal portfolios
- Timing when to do traditional as compared to alternative strategies
What Commodity Trading Advisors Are- Definition of a commodity trading advisor
- Fundamental and technical techniques
- Blending technical analysis uses including fibonacci ratios, patterns, support/resistance tools, sentiment
- Examples
- Contango and backwardation issues
- Tradeoffs on investing in physical commodities, producers or derivatives
- Margin requirements
- Special risks
- Evaluation of risk/reward results
Private Equity- Private equity - definition
- Private equity - legal structures
- Investment methods
- Cash flows versis accounting GAAP versus economic accounting
- Traps in cash flows
- IRR issues
- Mileposts versus cash flows
- Exit strategies
- LBO/MBO issues
- Example/cases
- Behavioral issues and herd investing
- Evaluation of risk/reward results
Private Equity versus Hedge Funds- Investment approaches similarities and differences
- Hedge fund investments in private equity
| Day 2Real Estate- Real estate structures
- Role in portfolio diversification
- Valuation methods of NOI, ATCF and ego issues
- Example and pro-forma issues
- Rent versus own
- Direct investment compared to REITS and quasi-real estate companies
- Hidden real estate issues
- Financially engineering in real estate
- Evaluation of risk/reward results
Hedge Funds- Definition of a hedge fund
- Industry comments on size
- Some key legal structures and regulations
- Common hedge fund traits
- Hedge fund styles and strategies
- Some illustrated examples, including merger arb and carry trades
- More exotic strategies with black boxes and algorithmic trading
- Evaluating hedge funds on specialized risk measures, including sortino, omega,, drawdowns, left tail stress tests
- Database biases
- Leverage issues evaluation of risk/reward results
Alternatives and Other Issues- Blended alternative investments risk/rewards results compared to traditional only investments
- Comments on other specialized alternative investments such as collectibles, entertainment financing and hypertrading
- Comments on replicating alternatives, especially hedge funds with the growing use of financial engineering methods
- Ethical issues and expected future regulation directions
- International issues and opportunities
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| Clients who register for this course will receive a complimentary 4-month subscription to FT.com. The Financial Times is the world's most respected financial newspaper, providing a broad assessment on finance, business and the industrial sector. The move to the electronic version follows an ongoing review of our environmental responsibilities as a global business and as part of the Pearson group. FT.com also has features that are not available in hard copy, such as: Special Reports, Alphaville, editor blogs, education sections and much more! Subscriptions will start within 6-8 weeks of the start of class and are limited to one subscription per client. (Please note: as of May 1, 2011, the electronic subscription replaces the hard-copy 3-month Financial Times subscription.) |
Lunch is included for all students taking day classes. |
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