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Managing Risk in Alternative Investment Strategies: Successful Investing in Hedge Funds and Managed Futures

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Managing Risk in Alternative Investment Strategies: Successful Investing in Hedge Funds and Managed Futures


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  • Copyright 2002
  • Pages: 320
  • Edition: 1st
  • Book
  • ISBN-10: 0-273-65698-8
  • ISBN-13: 978-0-273-65698-2

Alternative Investment Strategies, such as hedge funds, can enhance returns and reduce risk of a global investment portfolio. However, managing their "risk dimension" is critical to success. Managing Risk in Alternative Investment Strategies provides insight into the latest thinking about hedge funds and hedge fund risk management, elaborating on ways to approach some of the main problems and obstacles of this new investment class.

Sample Content

Table of Contents

 Chapter 1. Introduction

  • The evolution of hedge funds and managed futures
  • The traditional "black box" approach to hedge funds
  • Examples of investment disasters (eg LTCM)
  • Alternative investment strategies in the global portfolio
  • Increasing investor demand for transparency and liquidity
  • Fund of funds
  • The need for sophisticated risk management for AIS
 Chapter 2. The Universe of Alternative Investment Strategies
  • The universe ("map") of alternative investments
  • Hedge funds
  • Managed futures
  • Description of the individual strategy sectors (risk-return profiles)
  • The benefits of alternative investment strategies
  • The risks of alternative investment strategies
  • The risk premium in AIS
  • The Fund of Funds approach: asset allocation in a multi-manager fund
 Chapter 3. The Principles of Modern Risk Management in Financial Markets
  • Short history of risk management for financial markets
  • Market risk, credit risk, operational risk, and liquidity
  • How to measure risk
  • Analytical tools in risk management
  • Best practices in today¿s risk management
 Chapter 4. Risk from the Investor¿s Point of View
  • Process risk: selection of the right investment strategy
  • Transparency and liquidity
  • Data risk and performance measurement risk
  • The risks for the investor: underperformance, loss of capital, fraud
  • Qualitative and quantitative risk of AIS
 Chapter 5. The Risk Profiles of Different Strategy Sectors
  • Classification of strategy sectors in terms of inherent risk types
  • Quantification of risk for each strategy, "risk benchmarks"
  • Leverage
  • Transparency and liquidity
  • Correlations and diversification within fund of funds
 Chapter 6. Active Risk Management in a Multi-Manager Portfolio
  • The role of the fund of funds manager
  • The role of transparency and disclosure
  • Risk measurement versus risk management
  • Integrating risk management into asset allocation: the three dimensions of risk management in AIS portfolios
  • The sector allocation process: diversification as the key principle
  • Manager selection: the due diligence process, understanding the strategy
  • "Post investment risk management": monitoring, risk measuring and management
  • Current practices and developments in risk management of fund of funds
  • The role of technology in risk management
 Chapter 7. Risk Measurement/Management Systems in Practice
  • Tools available in the market (RiskMetrics, Algorithmics, etc)
 Chapter 8. Conclusion and Outlook     


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