Lecture 1 2019-20 post.pptx - Lecture 1 Introduction to Alternative Investments Classifications of AI by World Economic Fo rum Topic Introduction to

Lecture 1 2019-20 post.pptx - Lecture 1 Introduction to...

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Lecture 1 Introduction to Alternative Investments
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Classifications of AI by World Economic Fo rum
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Topic No. of Lectures Introduction to Alternatives 1 Hedge funds 4.5 Commodities 2.5 Private equities 3 Midterm 0.5 Buffer time 0.5 Total 12
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Hedge Funds Hedge funds - loosely regulated private invest ment vehicles that manage money for institutio n investors and wealthy individuals Employ a wide variety of trading strategies wi th maximum flexibility in investment: Highly leveraged Short selling Concentrated portfolios Complex trading strategies Dynamic trading strategies/styles
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Topics in Hedge Funds 1. Hedge fund strategies Equity HFs Long-short Short bias Market Neutral Emerging market Event driven HFs Merger (risk) arbitrage Activist Distressed debt
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Topics in Hedge Funds Relative value HFs Fixed income arbitrage Volatility arbitrage Convertible arbitrage Swap spread arbitrage Others: Global Macro, Managed futures
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Topics in Hedge Funds Portable alpha strategies Issues in assessing HF performance Data biases Asset illiquidity and serial correlation HF returns and their dynamic risk profil e
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Commodities Commodities Energy: Crude oil, natural gas, jet fuel, et c. Metals & mining: Precious metal - gold, sliver, platinum Industrial (base) metal - copper, zinc, iron Agricultural Grains: wheat, corn, rice, soy beans, etc. Soft: various animal and plant products – mea t, milk, OJ, fruits, cotton, silk, etc.
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Topics in Commodities Commodity supply theories and demand drivers Behavior of commodity spot prices in relation to inflation, interest rate, business cycles Accessing commodity investment products Theories of commodity futures pricing and comm odity index returns Hedging strategies: Delta and cross hedges
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Topics in Commodities Relative Value Strategies: Calendar, Process ing, Crack, Substitution, Quality/Location s preads Beneficial effects of commodity futures in a sset allocation Performance of commodity futures investing Effect of financialization of commodities
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Private equity (PE) Invest in equity, equity-linked, or debt securit ies of private firms Dominant type of securities PE investors hold ar e convertible preferred stocks PE investors are usually actively involved in th e management of the target or portfolio firms Highly illiquid investment
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Types of Private Equity Core Private Equity Venture capital (VC): Invest in startups Leveraged buyout (LBO) – aka “Private equ ity” Non-core Private Equity Growth capital Private debt funds Mezzanine financing Distressed debt (aka ”turnaround”) Direct lending funds
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Venture capital Minority equity stakes in privately-owned star t-ups in their early-, expansion-, and late-st ages Only in high-growth innovative sectors (e.g. I T, biotech) VCs bring crucial managerial and technical exp ertise Exit strategies: IPO, sale to strategic buyers (aka “trade sale”) or some secondary PE fund s
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  • Spring '17
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