Benefits of alternative investments Alternative investments represent an aggregate of hedge funds, private equity, real estate, commodities, managed futures, and a growing number of other types of (often exotic and mysterious) investments. Alternative investments have become increasingly popular and talked-about in the recent past – not only due to stories about billionaire fund managers and … Read more
Common features of alternative investments Besides being increasingly popular in the last decades, alternative investments have proved to have significant benefits for long-term portfolios of various types of investors. Nevertheless, in order to successfully invest in alternative assets and take advantage of their often high returns, controlled risk, and diversification benefits, you should know the … Read more
Alternative assets are not available to everybody Alternative investments are very diverse. You can choose from various styles of hedge funds, private equity funds, real estate, commodity investing vehicles, or even more exotic assets like a tropical forest or a highway bridge. Nevertheless, if you only have a few thousand dollars to invest, the scale … Read more
Alternative Investments Alternative investments have been growing in popularity in the last few decades: an increasing number of investors include hedge funds, private equity, or commodities in their portfolios. Compared to traditional investments like stocks and bonds, alternative assets have some different characteristics. Some of the unique features make the decision making and investment management … Read more
Non-normal returns of alternative investments and skewness Non-normal return distribution is one of the most common features of alternative investments. With alternative investments we mainly look at skewness of the return distribution, which compares probabilities and sizes of profits to those of losses. A positively skewed return distribution shows small frequency of very big profits, … Read more
There is a place on the internet where you can get a detailed portfolio snapshot from the world’s greatest traders and investors including George Soros, Bruce Kovner, Warren Buffett, Philip Falcone, or John Paulson. Regularly and for free. The place is US SEC (Securities and Exchange Commission). US Securities Exchange Act and 13F holdings report … Read more
Equity market directional hedge funds vs. classical mutual funds Equity market directional funds represent the most typical hedge fund strategy group in these days. Mostly trading stocks, they are like classical stock mutual funds, but they typically have more freedom and more courage in their trading strategies. Unlike classical mutual funds, equity market directional hedge … Read more
Convergence trading hedge funds, or arbitrage hedge funds try to discover situations where two related securities are mispriced relative to one another. They buy the relatively underpriced security and sell the relatively overpriced one. Profit is made when the price relationship gets back into “normal.” Arbitrage funds typically use sophisticated computer models, as computers are … Read more
Why do we need to classify hedge funds into styles? Classifying hedge fund trading styles into groups is good for: Choosing the right funds to invest in. Some trading styles are entirely unsuitable for a particular investor’s risk and return objectives and by knowing the basic characteristics of hedge fund styles the investor can immediately … Read more
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