Beruflich Dokumente
Kultur Dokumente
STUDY SESSION 18
ALTERNATIVE
INVESTMENTS
a
Open- end vs.
Closed- end
NAV
a. Managed investment
companies (mutual funds) Investment
company fees one-time fees
ongoing annual fees
Style
Sector
Index
b. Strategies
Global
Stable Value
In-kind
price
process Advantages
tax
Diversification
74.1.
Exchange traded
Alternative
Investments- Better risk management
Part 1
Composition is known
Advantages
Operating expense ratio
Tax
Few indices
Intraday trade
Disadvantages
Inefficient markets
Larger investors
Market risk
Mortgages
Aggregation vehicles
Characteristics
Discounted
after tax cash
flow model
R&D
Seed
stage
Initial marketing
Start-up
Formative financing
stage
74.2. Early
stage
Alternative Commercial production
First stage
Investments- financing
Part 2 Stages Balanced
stage Producing and selling products
Second stage
investing
Expansion Not yet generating income
stage
financing
Later Third stage Major expansion
stage financing
Mezzanine
(bridge IPO
g,h. Venture financing)
capital
investing
Illiquidity
Difficulty in valuation
Limited data
Characteristics Entrepreneurial /
Management mismatches
Timing in the
business cycle
Long/short funds
Classifications Market-neutral funds
Global macro funds
Event- driven funds
Leverage
Illiquidity
Potential for mispricing
k. Counterparty credit risk
i. Hedge Unique risks
Settlement errors
fund
Short covering
Margin calls
Performance
Self-selection bias
Backfilling bias
l. Survivorship bias
Biases
Smoothed pricing
Option-like strategies
Fee structures and gaming