Alternative Investments

by Unknown

• ISBN13: 9781119850601
• ISBN10: 1119850606
• Edition: 1st
• Format: Hardcover
• Copyright: 2021-11-24
• Publisher: Wiley

Summary

The complete guide to alternative investments, from experts working with CFA Institute

Alternative Investments is the definitive guide to understanding non-traditional asset classes. Alternatives are a disparate group of investments that are distinguished from long-only, publicly traded investments in stocks, bonds, and cash (often referred to as traditional investments). Alternative investments include real estate, commodities, infrastructure, and other non-traditional investments such as private equity or debt and hedge funds. They are attractive to investors because of the potential for portfolio diversification resulting in a higher risk-adjusted return for the portfolio.

Alternative Investments and its accompanying workbook (sold separately) lead students and investment professionals through the many characteristics of non-traditional assets, including:

• Narrow specialization of the investment managers
• Relatively low correlation of returns with those of traditional investments
• Less regulation and less transparency than traditional investments
• Limited historical risk and return data
• Unique legal and tax considerations
• Higher fees, often including performance or incentive fees
• Concentrated portfolios
• Restrictions on redemptions (i.e. “lockups” and “gates”)

CFA Institute is the world's premier association for investment professionals, and the governing body for the CFA^® Program, CIPM^® Program, CFA Institute ESG Investing Certificate, and Investment Foundations^® Program. Those seeking a deeper understanding of the markets, mechanisms, and use of alternatives will value the level of expertise CFA Institute brings to the discussion, providing a clear, comprehensive resource for students and professionals alike. Whether used alone or in conjunction with the companion workbook, Alternative Investments offers a complete course in alternative investments and their role in investment management.

Author Biography

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 170,000 members in 160+ countries and territories, including 163,000 CFA^®; charterholders, and 150+ member societies. For more information, visit www.cfainstitute.org.

Table of Contents

Foreword

Preface

Acknowledgments

About the CFA Institute Investment Series

Chapter 1: Introduction to Corporate Governance and Other ESG Considerations

           Learning Outcomes

1. Introduction and Overview of Corporate Governance
2. Stakeholder Groups
3. Principal– Agent and Other Relationships in Corporate Governance
4. Overview and Mechanisms of Stakeholder Management
5. Mechanisms to Mitigate Associated Stakeholder Risks
6. Company Boards and Committees
7. Relevant Factors in Analyzing Corporate Governance and Stakeholder Management
8. Risks and Benefits of Corporate Governance and Stakeholder Management
9. Factors Relevant to Corporate Governance and Stakeholder Management Analysis
10. ESG Considerations for Investors and Analysts

          Summary

 

Chapter 2: Introduction to Alternative Investments

          Learning Outcomes

1. Introduction
2. Investment Methods
3. Investment and Compensation Structures
4. Hedge Funds
5. Private Capital
6. Natural Resources
7. Real Estate
8. Infrastructure
9. Issues in Performance Appraisal
10. Calculating Fees and Returns

          Summary

 

Chapter 3: Real Estate Investments

           Learning Outcomes

Section A: Overview of Types of Real Estate Investment

1. Introduction and Basic Forms of Real Estate Investment
2. Economic Value Drivers, Role in Portfolio, and Risk/Return of Real Estate Investments Relative to Stocks and Bonds
3. Considerations in Analysis and Due Diligence
4. Indexes

Section B: Investments in Real Estate Through Private Vehicles

1. Introduction to Valuation Approaches
2. The Income Approach to Valuation: Discount Rates and the Direct
3. The DCF Method, the Relationship between Discount Rate and Cap Rate, and the Terminal Capitalization Rate
4. Private Market Real Estate Debt

Section C: Investments in Real Estate Through Publicly Traded Securities

1. Types of Publicly Traded Real Estate Securities
2. Valuation: Net Asset Value Approach
3. Valuation: Relative Value (Price Multiple) Approach
4. REIT Mini Case Study: Example of Disclosures and Valuation Analysis
5. Private versus Public: A Comparison 

          Summary

          General Characteristics of Real Estate

          Private Equity Real Estate

          Publicly Traded Real Estate Securities

 

Chapter 4: Private Equity Investments

           Learning Outcomes

1. Introduction
2. Introduction to Valuation Techniques in Private Equity Transactions
3. Contrasting Venture Capital and Buyout Investments
4. LBO Model for Valuation of Buyout Transactions
5. VC Method for Valuation of Venture Capital Transactions
6. Exit Routes: Return Cash to Investors
7. Risks and Costs of investing in Private Equity
8. Private Equity Fund Structures and Terms
9. Private Equity Fund

          Summary

 

Chapter 5: Introduction to Commodities and Commodity Derivatives

           Learning Outcomes

1. Introduction
2. Commodity Sectors
3. Life Cycle of Commodities
4. Valuation of Commodities
5. Commodities Futures Markets: Participants
6. Commodity Spot and Futures Pricing
7. Theories of Futures Returns
8. Components of Futures Returns
9. Contango, Backwardation, and the Roll Return
10. Commodity Swaps
11. Commodity Indexes

          Summary

 

Chapter 6: Hedge Fund Strategies

           Learning Outcomes

1. Introduction and Classification of Hedge
2. Equity Strategies: Long/Short Equity
3. Equity Strategies: Dedicated Short Selling and Short-Biased
4. Equity Strategies: Equity Market Neutral
5. Event- Driven Strategies: Merger Arbitrage
6. Event- Driven Strategies: Distressed Securities
7. Relative Value Strategies: Fixed Income Arbitrage
8. Relative Value Strategies: Convertible Bond Arbitrage
9. Opportunistic Strategies: Global Macro Strategies
10. Opportunistic Strategies: Managed Futures
11. Specialist Strategies
12. Multi- Manager Strategies
13. Analysis of Hedge Fund Strategies using a Conditional Factor Risk Model
14. Evaluating Equity Hedge Fund Strategies: Application
15. Evaluating Multi- manager Hedge Fund Strategies: Application
16. Portfolio Contribution of Hedge Fund Strategies

          Summary

 

Chapter 7: Capital Market Expectations: Forecasting Asset Class Returns

          Learning Outcomes

1. Introduction
2. Overview of Tools and Approaches
3. Forecasting Fixed Income Returns
4. Risks in Emerging Market Bonds
5. Forecasting Equity Returns
6. Forecasting Real Estate Returns
7. Forecasting Exchange Rates
8. Forecasting Volatility
9. Adjusting a Global Portfolio

          Summary

 

Chapter 8: Asset Allocation to Alternative Investments

           Learning Outcomes

1. Introduction and The Role of Alternative Investments in a Multi-asset Portfolio
2. Diversifying Equity Risk
3. Traditional Approaches to Asset Classification
4. Risk- Based Approaches to Asset Classification and Comparing Risk- Based and Traditional Approaches
5. Risk Considerations, Return Expectations and Investment Vehicle
6. Liquidity
7. Fees and Expenses, Tax Considerations, and Other Considerations
8. Suitability Considerations
9. Asset Allocation Approaches and Statistical Properties and Challenges of Asset Returns
10. Monte Carlo Simulation
11. Portfolio Optimization
12. Risk Factor- Based Optimization
13. Liquidity Planning and Achieving and Maintaining the Strategic Asset Allocation
14. Managing the Capital Calls and Preparing for the Unexpected
15. Monitoring the Investment Program

           Summary

 

Chapter 9: Integrated Cases in Risk Management: Institutional

           Learning Outcomes

1. Introduction
2. Financial Risks Faced by Institutional Investors
3. Environmental and Social Risks Faced by Institutional Investors

 

Glossary

About the Editors and Authors

Index