During the 10 year period up to 2007, hedge fund assets grew exponentially from $200 million to over $2 trillion, making this corner of the investment industry the most talked about and sought after. At the peak of the market, outsized returns and access to the top managers was the name of the game that was only available to the most privileged investors. When the hedge fund bubble burst in 2008, many investors witnessed first hand some of the structural weaknesses of the industry as investors were subjected to extended redemption tie-ins and gates.

The hedge fund industry is rebounding strongly after some high profile collapses and scandals that were brought about by the credit crisis. In 2008, many respected industry observers were heralding the demise of this opaque segment of the financial markets. But with performance recovering after a period of retrenchment and restructuring, many investors are reassessing hedge funds as an asset class with a view to increasing their allocations to this dynamic investment vehicle.

This 3-day programme will cover the following topics in detail:

• The new environment for hedge funds
• Hedge funds from the investor’s perspective
• The hedge fund business and business models
• Hedge fund styles and strategies
• How hedge funds generate their returns
• Asset allocation strategies and hedge funds
• Hedge fund replication

Day 1

Hedge Funds in The New Environment

Session 1: Hedge Fund – The New Landscape

• The current state of the hedge fund industry post credit crisis
• The institutionalisation of the hedge fund industry
• The growing importance of institutional investors
• The trend towards adoption of Managed Accounts
• The changing competitive landscape for surviving hedge funds
• Hedge funds and the new regulatory environment
• The new EU Directive on alternative investments
• The new generation of onshore hedge funds
• Where next for the fund of hedge fund business

Case Study: Institutional Requirements when investing in Hedge Funds 

Session 2 – Hedge Funds: The Investor’s Perspective

• The hedge fund bubble – causes and consequences
• The mind-set of hedge fund investors post-crisis
• Changing fee structures
• Transparency and disclosure requirements
• Lock-ups, gates and side pockets
• Carried interest, hurdles, high watermarks and position valuation
• Due diligence in a post-Madoff world
• The absolute Vs relative performance decision
• Choosing from the absolute performance menu
• Can hedge funds still be classified as absolute return vehicles?
• Choice of risk and stability of the risk/return profile
• Performance during hostile market environments
• Performance benchmarks for hedge funds

Case Study: Are Hedge Funds an Asset Class?

Session 3 – The Hedge Fund Business

• Why it has become more difficult to set up a viable hedge fund business
• What is a viable level of assets to create a successful hedge fund business
• Why a more concentrated hedge fund business is here to stay
• Different hedge fund business models
• Structuring and launching a hedge fund
• Legal aspects
• Operational aspects
• Personnel
• Regulation and compliance
• Risk control and monitoring
• Reporting

Case Study: Setting up a Hedge Fund

Day 2

Hedge Fund Strategies

Session 1 – Basic Foundations behind Hedge Fund Strategies

• The asymmetric nature of hedge fund returns
• Alpha maximisation, Beta minimisation
• Directional Vs non-directional bets (practical examples)
• Macro investing Vs Micro investing and Pair Trades (practical examples)
• Relative value and betting on the outcome of events
• Why quantitative strategies are failing to live up to expectations

Multiple Choice : Delegates will be tested on their understanding of the basic foundations behind hedge fund strategies

Session 2 – Relative Value, Event Driven and Arbitrage Strategies

• What does market neutral mean
• Equity market neutral
• Convertible bond arbitrage
• Fixed income arbitrage
• Credit arbitrage
• Capital structure arbitrage
• Merger arbitrage
• Distressed securities investing
• Features, benefits, risks and applications of these strategies

Case Study: Delegates understanding of these strategies will be tested via practical examples of the strategies in action

Session 3 – Opportunistic Strategies Arbitrage Strategies

• Equity hedge Vs equity non-hedge strategies
• Long/short equity investing
• Global Macro investing
• Tactical trading – systematic Vs discretionary traders
• Managed Futures and CTAs
• Features, benefits, risks and applications of these strategies

Case Study: Delegates understanding of these strategies will be tested via practical examples of the strategies in action

Session 4 – Managing Hedge Fund Risks

• Renewed focus on risk – why hedge funds blow up!
• The multidimensional nature of hedge fund risk
• Identifying the key risk factors in the hedge fund space
• Operational risk issues
• Counterparty risk issues
• Liquidity, leverage and transparency risk
• Tools for measuring and managing hedge fund risk
• The role of technology in managing risk
• Why hedge funds fail

Case Study: Why Hedge Funds Fail

Day 3

Hedge Fund Strategies

Session 1: Hedge Funds: Asset Allocation and Portfolio Construction

• Asset allocation theory and hedge funds
• The role of hedge funds in a portfolio
• Developing and implementing a hedge fund allocation for a range of clients
• Hedge funds and the client’s efficient frontier
• Minimum and maximum allocations to hedge funds
• Strategic or tactical positions in hedge funds
• Customising a hedge fund investment strategy into a traditional investment setting
• Asset allocation rebalancing between traditional and hedge fund assets

Case Study: Designing and constructing a hedge fund allocation policy

Session 2: Multi-Manager and Fund of Funds Solutions

• Does the hedge fund-of-funds business have a viable future?
• Due diligence in a post-madoff world
• What is the appropriate number and mix of funds
• Performance of fund of funds in down markets
• Fund of funds : Design and risk issues
• Managing the hedge fund of funds mix over time
• Structural issues with respect to fund of funds
• Style analysis of fund of funds

Case Study: Choosing fund of fund managers for clients with different risk profiles

Session 3: Hedge Fund Replication Strategies

Replication strategies and alternative beta

The different routes to hedge fund replication

• Factor replication
• Position replication
• Distribution replication
• Mechanical trading

Are hedge fund replication strategies chasing a constantly moving target

Weaknesses of hedge fund replication strategies

Advantages of hedge fund replication strategies

How effective are hedge fund replication strategies

Case Study: Hedge Fund Replication

• The Course Director is a dedicated training solutions provider to the Global Wealth Management and Fund Management industries. He is highly respected for his ability to integrate selling skills training with complex product training in an informative and entertaining style. 
  
  He began his investment management career with Abbey Life in Dublin before moving to London in 1985 to work for Irish Life Assurance Plc. At Irish Life, he was responsible for investment product marketing and new fund launches and was responsible for the company's successful entry into the single premium bond market. He joined County Bank at the end of 1986 as Research and Development executive in the unit trust division. In 1987 he transferred to the pension fund department, assuming responsibility for the management and performance of Canadian equity investments. In 1991, he was seconded to the European equity desk to manage a research project on smaller European companies. At the end of 1992, he was appointed head of the North American equity desk. 
  
  He has a B.A.(Hons) in Economics and Politics, an M.A. in Development Economics and an M.B.A. in Finance from City University Business School in London. He is the course director and lead trainer on a number of Euromoney training programmes. He has undertaken numerous training assignments throughout Europe, Asia and the U.S.A. for leading private banks and asset managers. In 2007, he founded a boutique asset manager focused on researching and investing in a broad range of emotional assets from fine art and rare stamps to diamonds and classic cars.
  

  Courses run by this instructor

  • Pension Fund Strategy
  • School of Pensions and Retirement Planning

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

Investment Fund Operations and Administration

13-15 Nov 2013 (Paris, France)

A 3-day, highly practical course which provides a working knowledge of how unit trusts, mutual funds, pensions funds and hedge funds are constructed, invested, managed and administered.

Portfolio Performance Measurement and Attribution Analysis

9-11 Oct 2013 (Paris, France)

A 3-day practical financial training course designed to give a thorough understanding of the key techniques used in performance measurement. This financial training course ranges from basic return calculation, risk-adjusted performance measurement, achieving GIPS® compliance to advanced multi-currency, multi-period attribution techniques.

Pension Fund Strategy

14-16 Oct 2013 (Paris, France)
10-12 May 2014 (Paris, France)

A 3-day, comprehensive course to help delegates understand the complex world of Pension Investment Strategy with specific reference to areas such as the global pensions crisis, the challenge to the cult of the equity, the role and purpose of pension funds and measuring and modelling a pension liability.

Managing Risk in Asset Management

29-31 Jan 2014 (Istanbul, Turkey)

This 3-day, intermediate-level training course will review the industry events and regulatory developments, identify asset management risks, review appropriate risk frameworks and teach delegates the necessary skills to develop and implement risk management processes and techniques appropriate to their circumstances.

Global Macro Strategies and Systematic Risk

18-21 Nov 2013 (Paris, France)

A 4-day course suitable for asset managers and investors who have had exposure to traditional asset allocation techniques but are keen to explore innovative and quantitative approaches to the global macro style. In addition, it will provide supplementary skills and robust techniques for those seeking greater understanding of underlying capital market dynamics and the major influences on systematic risk within the macro-financial environment.

Long Term Asset Management

16-20 Jun 2014 (Geneva, Switzerland)

Long Term Asset Management

17-20 Jun 2013 (Paris, France)

School of Pensions and Retirement Planning

23-27 Jun 2014 (Amsterdam, Netherlands)

A comprehensive 5-day course addressing many of the current pension issues from both the asset and liability perspectives to give delegates a holistic appreciation of the complex issues involved.