Fundamentals of Alternative Investments: Learning Modules

New instruments and asset classes are making portfolio construction more complex, adding a variety of options for generating returns and protecting downside risk. Take a look at what's covered.

Lesson 1:

Traditional vs. Alternative Investments

  • Traditional Investments
  • Structures in Alternative Investments
  • Traditional vs. Alternative Investments
  • Types of Alternative Investments
  • Drivers of Asset Allocation
  • Registered Products vs. Private Placements
Lesson 2:

Investment Returns and Risk (Benchmarking)

  • Investment Returns
  • The Normal Distribution Return Attribution
  • Benchmarking with Peer Groups
  • Benchmarking with Betas
  • Risk and Standard Deviation
  • Autocorrelation
  • Other Measures of Risk
  • Risk-Adjusted Performance
Lesson 3:

Correlation and Efficient Frontiers

  • Covariance
  • Diversification
  • Autocorrelation
  • Beta as a Measure of Systematic Risk
  • Challenges of Statistical Analysis
Lesson 4:

Portfolio Management and Asset Allocation

  • Asset Allocation
  • Questionnaires and Model Portfolios
  • The CAPM and Passive Indexing
  • The Endowment Model
  • Mean-Variance and Higher Moment Models
  • Risk Budgeting Models
  • Multi-Factor Models
  • Liability-Driven Models
  • Risk-Parity Models
  • Scenario-Based Models
  • Core vs. Non-Core Models
Lesson 5:

Due Diligence

  • Introduction to Due Diligence
  • The Investment Objective of the Fund
  • The Fund Investment Process
  • Value Added by Fund Managers
  • The Structural Review
  • The Strategic Review
  • Strategy-Specific Due Diligence: Convertible Arbitrage
  • Best Practices: President’s Working Group on Financial Markets
Lesson 6:

Risk Management

  • Risk Management
  • Stated Investment Strategy Risks
  • Managing Market Risk
  • The Three Fund Functions
  • Investment Process Risk
  • Operational Risk
  • Internal Control Procedures
  • Potential Interaction of Operational Errors and Market Risks
Lesson 7:

Hedge Funds 1: Structure, Categories, and Biases

  • Overview of Hedge Funds
  • Hedge Fund Industry: Growth
  • Hedge Fund Industry: Overall Performance
  • Hedge Fund Industry: Investment Strategies
  • Dynamics of Hedge Funds
  • Issues with Hedge Fund Data
Lesson 8:

Hedge Funds 2: Relative Value and Event Driven Strategies

  • Introduction to Event-Driven Hedge Funds
  • Sources of Event-Driven Strategy Returns
  • Activist Investing
  • Merger Arbitrage
  • Distressed Debt Funds
  • Capital Structure Arbitrage
  • Other Types of Event-Driven Funds
  • Relative Value Hedge Funds
  • Convertible Bond Arbitrage
  • Fixed Income Arbitrage
  • ABS and MBS Strategies
  • Relative Value Multi-Strategy Funds
Lesson 9:

Hedge Funds 3: Macro and Managed Futures Strategies

  • Introduction to Macro and Managed Futures Funds
  • Discretionary vs. Systematic Trading
  • Technical Analysis
  • Fundamental Analysis
  • Macro Funds
  • Managed Funds
  • Systematic Trading Rules
  • Asset Returns
  • Conditional Correlation
  • Maximum Drawdown
  • Portfolio Effects
Lesson 10:

Hedge Funds 4: Funds of Funds

  • Introduction to Funds of Funds
  • Internal Management & Multi-Strategy Funds
  • Four Functions of Funds of Funds
  • Benefits of Funds of Funds
  • Disadvantages of Funds of Funds
  • Value Added by Fund of Funds Managers
  • Manager Allocation and Selection Process
  • Portfolio Construction Considerations
  • Evaluating Fund of Funds Performance
Lesson 11:

Hedge Funds 5: Equity Strategies

  • Introduction to Equity Hedge Funds
  • Equity Hedge Fund Strategies
  • Differentiating Equity Hedge Funds
  • Equity Long/Short Funds
  • Equity Market-Neutral Funds
  • Short-Bias Funds
  • Short Selling Risks and Returns
  • Performance Attribution
  • Fundamental vs. Quantitative Managers
  • Quantitative Strategies
  • Fundamental Strategies
  • Momentum-Based Equity Approaches
  • Anomalies and Anomaly Strategies
Lesson 12:

Real Assets 1: Timberland, Farmland, and Intellectual Property

  • Introduction to Real Assets
  • Types of Lots
  • Timberland Investment Characteristics
  • Farmland Investment Characteristics
  • Infrastructure Investment
  • Intellectual Property Characteristics
  • Art Characteristics
  • A Simplified Model of IP Valuation
Lesson 13:

Real Assets 2: Real Estate Equity and Markets

  • Real Estate Characteristics
  • Real Estate Valuation
  • Real Estate Investment Opportunities
  • Real Estate Indices
  • Real Estate Securitization
Lesson 14:

Private Equity 1: Introduction and Performance Analysis

  • What is Private Equity?
  • Why Private Equity?
  • Private Equity Fund Structure
  • Cash Flows, Fees & Waterfall
  • Common Performance Measures
  • IRR Calculation
  • TVPI, DPI, and RVPI Calculations
  • Performance Measures
  • Risks Associated with Private Equity
Lesson 15:

Private Equity 2: LBO, VC, and Debt Strategies

  • Venture Capital Funds
  • Performance Measures
  • Buyout Funds
  • Mezzanine Debt
  • Distressed Debt
  • Private Equity Investment Process
  • Liquidity Management
  • Manager Selection
Lesson 16:

Commodities 1: Markets and Inflation Protection

  • Introduction to Commodities
  • Long-Term Commodity Returns
  • Commodities vs. Financial Assets
  • The Role of Emerging Markets
  • Ways to Gain Exposure to Commodities
  • Contango and Backwardation
Lesson 17:

Commodities 2: Beta Products, Alpha Products, and Benchmarks

  • Alpha and Beta Strategies
  • Alpha: Directional Strategies
  • Alpha: Relative Value Strategies
  • Relative Value: Calendar Spreads
  • Relative Value: Correlation Spreads
  • Intra-Market Relative Value Strategies
  • Fundamental Analysis
  • Commodity Beta
  • Commodity Futures Indices
  • Enhanced Commodity Futures Indices
  • Major Commodity Indices
Lesson 18:

Structured Products 1: Credit Default Swaps (CDS)

  • Introduction to Credit Default Swaps
  • Major CDS Concepts
  • Trigger Events
  • Valuing a CDS
  • Users and Uses of CDS
  • The Economic Role of CDS
  • CDS vs. Total Return Swaps
  • Lifecycle of a CDS
  • Additional Details about CDS
  • CDS Indexes
Lesson 19:

Structured Products 2: Collateralized Debt Obligations (CDO)

  • What is a CDO?
  • CDO Balance Sheet
  • CDO Cash Flow Waterfall
  • Posting of Default Losses
  • Credit Ratings of CDOs
  • Economic Roles of CDOs
  • Terminology and Practices of CDOs
  • CDO Risk Management
Lesson 20:

Capstone: The Risks and Rewards of Alternative Investments

  • Fundamentals Retrospective
  • Diversification across Idiosyncratic Risks
  • Diversification across Risk Factors
  • Diversification across Scenarios
  • Return Enhancement through Liquidity Premiums
  • Return Enhancement through Complexity Risk Premiums
  • Return Enhancement through Alternative Beta Opportunities
  • Return Enhancement through Investor Asymmetries
  • Return Enhancement through Persistent Alpha
  • The Challenges of Alternative Investment Management
  • The Risks and Rewards of Alternative Investments

Bonus Topics:

Liquid Alternatives

  • Limited Partnerships
  • 40 Act and UCITS Funds
  • Types of Funds and Structures
  • Performance
  • Portfolios, Due Diligence, and Challenges of Liquid Alts

Opportunities in Private Credit

  • Fixed-Rate vs. Floating-Rate Debt
  • Investment Grade vs. High Yield Debt
  • Capital Structure and Covenants
  • Credit Ratings and Credit Spreads
  • Bankruptcy, Defaults and Recovery Rates
  • Distressed Debt
  • Mezzanine Debt
  • Direct Lending
  • Interval Funds and BDCs
  • Private Debt in Hedge Funds and Private Equity Funds

ESG Investing 1: History, Approaches, and Integration

  • The History of ESG
  • Approaches to ESG
  • The Three Pillars of ESG