Course Overview
'Hedge Funds and Alternative Assets' constitute one of the fastest growing sectors of asset management. In a relatively short period, the hedge fund universe has grown from a small number of firms led by the legendary managers (George Soros, Julian Robertson and others) to a large market with thousands of players. Originally exclusively serving the needs of very high net worth individuals, the cloistered world of hedge funds has progressively opened its doors to private and institutional investors seeking diversification alternatives, lower risks and higher returns. They have become, and are likely to remain, an important element of modern
financial markets.
This course provides a comprehensive overview of the products, structures, investment methodologies, regulatory environment, performance measurement, due diligence and risk management of hedge funds. It
offers an invaluable opportunity to review recently launched products in Asia, assesses their 'riskiness'
for the investors and develops the participant’s understanding of the complex structures.
Summary of the course content
- Characteristics and investment policies
- Legal and regulatory environment
- Operational and organisational structures
- Tools and investment products used
- Indices, databases and benchmarks
- Manager searches and due diligence
- Funds of funds
- Capital guaranteed and structured products
Methodology
This practical course is taught through case studies based on the most recent market developments and uses guided group exercises to ensure the highest level of understanding.
Documentation and course texts
All delegates will receive comprehensive course documentation for use during and after the course, enabling them to return to their organisations with an extensive and valuable source of information for future reference.
Who should attend this training course?
- Investment managers
- Private bankers
- Private and institutional investors
- Bank and corporate treasury managers
- Risk managers
- Relationship managers
- Structured products managers
- Research analysts
- Finance directors
- Management consultants
- Regulators
Supporting publications
Day 1
Hedge funds as investments and organization
- The role of hedge funds in a portfolio: a statistical argument
- Reduced volatility
- Diversification
- Absolute returns
- The "Hedge" in hedge funds
- Directional vs. non-directional returns
- Challenges with hedge funds
- Time horizons, illiquidity, information flows performance measurement and analysis
- Risk management
- Beyond the long-only world: differentiating common attributes of hedge funds
- Use of short-selling
- Use of leverage
- Use of derivatives to lever, express views, and arbitrage
- De-emphasis on diversification
- The hedge fund market
- History
- Investors: the shift from HNW to institutions
- The food chain: the role of the prime broker and other key players
- Hedge fund organisations
- Limited partnerships vs. public vehicles
- Direct investment vs. multi-strategy funds vs. fund-of-funds
- Master and feeder structures
- Compensation: carries, hurdles, high watermarks, position valuation
- Funds flows: closes, lockups, liquidity
- Hedge fund performance: individual fund level
- Key metrics: sharpe ratio, information ratio, sortino ratio
- Interpreting the key metrics
- Hedge fund performance: as an asset class
- The popular indices: HFRI, Hennessee, CS/Tremont
- Data problems: survivor bias, lack of disclosure, position valuation, stale data
- Hedge fund fund-of-funds: good or bad?
- Portable alpha
- Hedge funds as alpha engines
- The problem of embedded betas
- Creating a portable alpha vehicle
- Structured products
- Capital-guaranteed notes with hedge fund upside
- Alternative assets: private equity vs. hedge funds
- Benefits to the portfolio: hedge funds vs. private equity
- Hedge funds as private equity: distressed strategies
- Private equity as hedge funds: activist strategies
- Risk management
- Risk management disciplines
- Risk across different strategies: levels of leverage, counterparty risk
- Recourse vs. non-recourse relationships
- Hedge fund blow-ups: why?
- Directional strategies masquerading as non-directional: Amaranth
- Liquidity crises: LTCM
- Excessive leverage
Day 2
Hedge funds as investors - strategies for generating returns
- Varieties of hedge funds: investment strategies
- Long/short (net long/short and market-neutral)
- Arbitrage/relative value
- Event-driven
- Global/macro and managed futures
- Strategy spotlight: long/short
- Pair trades: Hershey/Wrigley, Home Depot/Lowe's, and Hurricane Katrina Pair Trades
- Asian Pair Trade: Hong Kong Aircraft Engineering/SIAEC
- European conglomerates: fundamental pickup, cheap valuation vs. US multi-industry
- Strategy spotlight: event-driven
- A restructuring Idea: Hilton Group PLC Sale of hotel division to Hilton Hotel Inc.
- Japanese event-driven trades
- Asian restructuring idea: Korea Tobacco and Ginseng
- Agilent restructuring
- Strategy spotlight: basket trades
- Long/short: long ASE 200/short Australian property-related basket
- Strategy spotlight: global/macro
- Uridashi carry trades: Yen/New Zealand dollar
- Relative value vs. arbitrage vs. convergence
- Strategy spotlight: arbitrage/relative value
- American Express spin-off of Ameriprise Financial
- Altria Group spin-off of Kraft Inc.
- Calpine: capital structure arbitrage
- Closed-end fund arbitrage
- Fixed income-oriented strategies
- Directional Strategies: credit, global/macro
- Non-directional strategies: yield curve, credit spread, statistical arbitrage
- GM debt/equity
- Callable vs. non-callable: MBS vs. treasuries
- Spread strategies: quality vs. junk
- Hedge fund use of derivatives
- Options: synthetic longs and shorts
- Futures: synthetic longs/shorts, beta exposures, "re-equitisation"
- Swaps: capital-efficient longs, beta exposures
- CDS: synthetic credit longs/shorts
- Strategy spotlight: convertible bond arbitrage
- Orion power: cashflow Strategies
- Orion power: volatility strategies - delta, gamma, vega
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Andrew Regan
Andrew Regan, CFA served as an investment banker at Merrill Lynch and as a securities analyst at Donaldson, Lufkin, and Jenrette, where he counselled large institutional investors on their retail sector holdings.
In addition to these conventional sell-side duties, he was centrally engaged while at DLJ in a number of banking transactions involving retailers, including LBOs, IPOs, primary and secondary equity offerings, and private placements. He also assisted in the successful recapitalisation of a major real estate portfolio in the Silicon Valley area of California.
As an experienced training consultant, Mr Regan provides pedagogical support to organisations in the theory and practice of corporate finance and asset markets In his teaching work, he develops overall curricular strategies, prepares case and other instructional materials, delivers programs in the classroom, and offers follow-up evaluation.
He has delivered programs for clients throughout North America as well as Europe, Latin America, Asia, Africa, and the Middle East.
Andrew received his A.B. magna cum laude in Modern European History from Harvard College, his M.Sc., with Distinction, in West European Politics from the London School of Economics, and his M.B.A., with High Honors, from Harvard Business School, where he was a George F. Baker Scholar, Charles M. Williams Fellow, and Dean's Doctoral Award Winner. He holds the CFA Charter.
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