Browsing: Access to Alternatives

Access to Alternatives

Democratization Without Education

Nov 18th, 2019 | Filed under: State of the Industry, Access to Alternatives, Private Equity, Manager Selection, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CAIA Association CEO The American history buffs out there will know that we are just a few short weeks away from the 246th anniversary of the Boston Tea Party. Back in 1773, the British government was deep in debt and decided the very best course was toRead More


What if Cryptos Succeed Only After the US has Locked Itself Out?

Oct 29th, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Recent developments in cryptocurrency have brought new currencies and more uncertainty about them and some of the underlying investments in this brave new world. Anthony Pompliano, a founder and partner at Morgan Creek Digital, tackles these issues and more relating to the cryptocurrency universe in his blog, Off the Chain.Read More


AIMA: Looking at the Canadian Landscape

Oct 22nd, 2019 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Infrastructure, Newly Added, Hedge Funds, Commodities & Natural Resources

The Alternative Investment Management Association first opened a branch in Canada in 2003. In recent days, AIMA has posted a report on what it calls the “landscape.” It doesn’t mean the Rockies. It means the lay of the land for alternative investments in that country. AIMA’s report looks at aRead More


Bitcoin Derivatives Behaving Just Like Other Underlying Assets

Oct 15th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Risk Management, Hedge Funds

Bitcoin derivatives act a lot like the derivatives of other asset classes. Two scholars at the University of London recently looked at bitcoin’s “volatility smiles and skews” as found in the short and long dated maturity of options traded at the Deribit Exchange in 2019. Helyette Geman and Henry Price,Read More


Spoti-sly

Sep 30th, 2019 | Filed under: Access to Alternatives, Private Equity, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CEO, CAIA Association How do you turn a millennial into a capitalist? Sell her SNAP in the post-IPO market. A little hindsight here shows how ridiculous this all looked. The initial sellers of the shares were the founders and their VCs (just under 30% of the offering),Read More


The Fintech M&A Market Hasn’t Peaked—Yet

Sep 22nd, 2019 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added

A new report seeks to “take the temperature” of the mergers and acquisitions activity in fintech, looking at input from 100 senior executives from banks, asset managers, fintech businesses, PE and VC firms active in this space. There are a lot of potential acquirers, along with some who may haveRead More


The Newest New Thing? Initial Exchange Offerings

Sep 11th, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Initial Exchange Offerings, that is, offerings administered by a crypto exchange, on behalf of a startup—where the startup is trying to raise funds with newly issued tokens—has developed as an alternative to an older model, the Initial Coin Offering, where participants make their contributions to a smart contract. Hirander MisraRead More


Negative Interest Rates: A Reason to Invest in Hedge Funds?

Sep 9th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

Negative interest rate policy—that is, central bank arrangements that seek to inspire spending by punishing savings, not merely in real but in nominal terms—have spread in recent years among the developed economies, and are now in use in Japan, Switzerland, Sweden, and the Eurozone. Denmark got the ball rolling inRead More


PORTFOLIO PROTECTION VIA MANAGED FUTURES LIQUID ALTS?

Sep 8th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds, Commodities & Natural Resources

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION The mafia and the hedge fund industry share some characteristics. Both are powerful, non-transparent, and create little value for society. Naturally the mafia is a criminal organization while the only “criminal” element of hedge funds are the high fees they are charging forRead More


Corporate Restructuring: United States vs. United Kingdom

Sep 2nd, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Private Equity, Private Debt, Newly Added, Asset Allocation, Hedge Funds

David Stevenson, a US District Court Judge for the Northern District of Texas, has presented his analysis of the  differences between the law in the United Kingdom and the United States concerning “a debtor’s ability to approve a restructuring arrangement over the objection of creditors that disapprove.” This is moreRead More


QUANT STRATEGIES: THEORY VS. REALITY

Aug 11th, 2019 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION When pitching an investment product with a backtested history the frequent response from potential investors is that they have never seen a bad backtest. Naturally this is true as there is no point in marketing a strategy with a poor backtest as investorsRead More


Postcards from the Edge

Aug 5th, 2019 | Filed under: State of the Industry, Access to Alternatives, Private Equity, Newly Added, What About Beta?, Hedge Funds

By Bill Kelly, CEO, CAIA Association As the calendar turns to August we are in the waning weeks of summer in the northern hemisphere. Perhaps it is a good time to turn to the mailbag to see who has been doing what in this halcyon season… From Jerome in DC Read More


SOS

Jul 1st, 2019 | Filed under: State of the Industry, Access to Alternatives, Newly Added, Asset Allocation, What About Beta?

By Bill Kelly, CEO, CAIA Association Ask someone of a certain generation to name the most common worldwide distress signal, and they will likely come back with SOS. No surprise then that this same signal, borne from the Morse code, turns 111 years old on this date in history. MostRead More


Mind the Gap: The Unforeseen Consequences of Smart Beta

Jun 27th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

A new paper by Sean Markowicz, a strategist at Schroders, looks into the possibility that fund flows into the assets generically called smart beta are having detrimental consequences for the financial system. It also sheds some light on investors’ bad timing regarding ETFs. The assets at issue are, according toRead More


What Do Owners Think of Smart Beta Strategies?

Jun 23rd, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

FTSE Russell has posted its sixth annual survey of global asset owners’ views of smart beta. Smart beta is a strategy that uses indexes, but that is not traditionally cap-weighted, that is, one where the construction of the index itself incorporates the investment strategy, capturing investment factors or market inefficiencies.Read More


A HORSE RACE OF LIQUID ALTERNATIVES

Jun 13th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds, Commodities & Natural Resources

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION Investing is challenging as it is complex and complicated, which requires continuous learning and updating of mental frameworks. Conflicts and contradictions are found everywhere. For example, data from the mutual fund industry shows that most funds fail to outperform their benchmarks, but investors inRead More


SCOTUS Leaves a Big Pharma Insider-Trading Conviction Intact

Jun 6th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Hedge Funds

On June 3, the US Supreme Court denied certiorari in the matter of Martoma v. US. This is the end of the line, then, for the appeals of Mathew Martoma’s criminal conviction and sentence. Martoma is a former portfolio manager for SAC Capital, now known as Point72 Asset Management. HeRead More


Public to Private LBOs and Innovation

May 21st, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Private Equity, Private Debt, Newly Added

A new study considers the proposition that indebtedness can reduce innovation. It offers support for the view that indebtedness in a particular context reduces patent flow. But whether patent flow should be considered a good surrogate for innovation remains open to question. An argument that has long been aimed atRead More


HEDGE FUND ETFS: BETTER THAN THE ORIGINALS

May 12th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION As Amazon has been decimating large parts of the retail industry over the last two decades, ETFs have done the equivalent to the mutual fund industry in the financial world. Today ETFs are covering nearly all areas of the markets, no matter howRead More


Price Discovery in the Bitcoin Markets

Apr 30th, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Tatja Karkkainen, a scholar on financial technology who is pursuing a PhD at the University of Glasgow, has written an illuminating paper on price discovery in the bitcoin markets. She begins with the observation that CBOE and CME introduced bitcoin futures in December 2017, “as the first institutional standard cryptocurrencyRead More


ICOs Versus VC Funding for New Ventures

Apr 4th, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Private Equity, Newly Added

Yes, venture capital manager, we understand that you want a piece of that unicorn yonder. But does the unicorn want you? That is the question raised by a new paper from two scholars affiliated with New York University, Yannis Bakos and Hanna Halaburda, “Funding New Ventures with Digital Tokens.” Specifically,Read More


Smart Beta and Tail Events

Feb 5th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

A sound “portfolio optimization strategy” is one that takes into consideration how its assets are behaving in the bad times, those that represent the left-side tail of the bell curve. This is not all that novel an idea, but Maria Kartsakli and Felix Schlumpf, Zurich Insurance Company executives, give itRead More


Modeling the Volatility of Crypto Exchange Rates

Jan 31st, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Risk Management

GARCH (Generalized Autoregressive Conditional Heteroskedasticity) models are very useful for estimating the volatility for a lot of more traditional assets (stocks and bonds) and their indices, which is why they’ve been around since the 1980s. But when they’re used for Bitcoin, Ethereum, Ripple, and Litecoin they yield incorrect predictions forRead More


Mergers, Acquisitions and Unscrambling an Omelette

Jan 8th, 2019 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Hedge Funds

Those who pursue alpha through the highways and byways of mergers are surely paying close attention to the AT&T/Time Warner litigation, which may end by considerably reducing the regulatory risk that firms making a “vertical” purchase in the digital/communications world will hereafter face. This is one of the points raisedRead More


Risks & Rewards: The Future of Finance in Blockchain

Jan 6th, 2019 | Filed under: Data Science & AI, Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Risk Management

A new article by Dave Dowsett and Heather Wied, both of Invesco, looks at blockchains and the way this new technology, precisely as it divorces itself from its original significance as a feature of the cryptocurrencies, is ready to transform finance. Dowsett and Wied contend that blockchain “offers the possibilityRead More


ETF Arbitrage and Its Consequences

Jan 1st, 2019 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

A new paper by Ilias Filippou and two other scholars looks at ETF arbitrage. This is a trading strategy that plays off of discrepancies between the value of the exchange-traded funds on the one hand and the value of their underlying stocks on the other. ETF arb is not new,Read More


Top 5 Alpha Stories of 2018

Dec 30th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Private Equity, Newly Added, Asset Allocation, Hedge Funds

Five stories stand out as the dominant stories for and about pursuers of alpha in the year just passed. There is nothing arbitrary about the list below. We admit, though, that the order in which we present them is arbitrary: that is, it is not a ranking, and it isRead More


10 Years Later: Reflections on the Madoff Meltdown

Dec 23rd, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Manager Selection, Newly Added, Asset Allocation, Hedge Funds

It was just about 10 years ago (Dec. 10, 2008) that Bernie Madoff acknowledged to his sons, Mark and Andrew, that he had “absolutely nothing left” of the funds that had been entrusted to him; that the investment fund that bore his name was “just one big lie.” There isRead More


McKinsey on Asia’s Asset Managers

Dec 16th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Manager Selection, Newly Added, Asset Allocation

Assets under management for Asia’s managers have ballooned in the last 10 years, with an increase on average of 9% annually. Performance has been such as to encourage inflow. A recent study by McKinsey suggests that the “good times” will “keep rolling.” But it also cautions that the opportunities inRead More


ISSA Reports on the Crypto-Infrastructure

Dec 12th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

This has been a terrible year for cryptocurrencies. Bitcoin, the flagship for the asset class, peaked in the middle of December 2017 at a value of above $17,000. By the end of January this year, it was below $10,000. By September BTC had settled into a price range of $6,500.Read More


Canadian Mutual Funds Readying to Launch Liquid Alternatives

Nov 18th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Scotiabank recently released what it calls a “high-level guide for mutual fund companies interested in launching liquid alternative products.” The creation of this guide was stimulated by a reform of the regulations of the Canadian Securities Administrators, aimed at making liquid alternatives more readily available to investors in Canada. OnRead More


SEC No-Action Letter: Eases Transactions with Affiliates

Oct 25th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added

The Division of Investment Management of the Securities and Exchange Commission issued a no-action letter Oct. 12 that may make life easier for mutual fund boards and business development companies that have reason to engage in “affiliated transactions” as defined by the 1940 Act. In response to a request fromRead More


Some Clarity from the Delaware Supreme Court for Activists

Oct 18th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Hedge Funds

The Delaware Supreme Court, on Oct. 9, upheld the Chancery Court’s dismissal of a buyout/squeeze-out related lawsuit. In the process, it issued an opinion that indicates that the room for activist investors to use litigation or the threat of litigation to derail controlling shareholder transactions may be quite small, andRead More


National Market System: What to End; What to Mend

Oct 14th, 2018 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Commodities & Natural Resources

The Principal Traders Group of the Futures Industry Association (FIA PTG) recently offered its thoughts on market structure, outlining one direction of reform for the Securities and Exchange Commission’s Reg NMS. Reg NMS (National Market System) was promulgated in 2005, in order to ensure competition among markets, and in theRead More


Tiptoe Thru’ the Cryptos With Yale

Oct 9th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Newly Added, What About Beta?

By Bill Kelly, CEO, CAIA Association Fifty years ago, Tiny Tim, the ukulele-wielding father of falsetto, released his self-aggrandizing album entitled God Bless Tiny Tim. Love it or hate it, those of a certain generation will never forget Track 2 entitled “Tiptoe Thru’ The Tulips With Me.” In the modernRead More


Cryptocurrency Arbitrage: Two Looks

Sep 27th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Do investors arbitrage cryptocurrencies? Two recent studies offer a “yes” answer, though they in certain other respects differ significantly in their conclusions. Specifically, one study shows that in one respect arbitrage has done its duty and effectively eliminated the opportunities for arb profits, enforcing efficiency. In other situations, though, theRead More


The View from Las Vegas: Quiet Buying? Aggressive Buying?

Sep 23rd, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Commodities & Natural Resources

On Sept. 24, the 9th Annual Inside Alternatives and Asset Allocation event convenes at Wynn Las Vegas, with CAIA sponsorship. The purpose of the event: to look beyond traditional alternative investments and strategies, to take the measure of a new breed of alternatives, including impact/SRIs, cryptocurrencies, and the application ofRead More


D’oh!

Sep 17th, 2018 | Filed under: Access to Alternatives, Newly Added, What About Beta?, Risk Management

Much has been written this week about the fall of the house of Lehman. Too big to fail became “someone has to” and the rest is history. The demise of Lehman has been one of the many sign posts that defined the GFC and now, ten years on, traditional and socialRead More


Are ICOs Encoding Their Governance Promises?

Sep 16th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Scholars affiliated with the University of Pennsylvania recently produced a paper about digital currencies and initial coin offerings, “Coin Operated Capitalism.” The gist of the paper is that the purchase of such tokens may be riskier than investors have thus far been led to expect and may entail more risk thanRead More


Cryptocurrencies: Alpha and Malta

Aug 30th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Malta was the first jurisdiction within the EU to develop a regulatory system for collective investment schemes that invest in cryptocurrencies. A new paper offering what it calls a “top-down analysis” of hedge funds involved with cryptos details the regulatory framework now in force in Malta, highlighting the set-up andRead More


New SEC Commissioner Dissents on a Bitcoin ETF

Aug 9th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Commodities & Natural Resources

The U.S. Securities and Exchange Commission recently (on July 26) disapproved of proposed rules changes that would have greenlit listing of the Winklevoss Bitcoin Trust on the Bats BZX Exchange.  In essence, the SEC has now rejected the listing of a Bitcoin exchange-traded product (ETP) on a national exchange. TheRead More


Active Management, the Business Cycle, and the Silk Road

Jul 31st, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

LPL Financial’s 2018 Forum Conference for investors took place in Boston this week, Sunday through Tuesday. This is an annual event that brings together thousands of advisors and program managers to discuss industry issues and new products. LPL is an independent broker-dealer headquartered in Boston, with offices in Fort Mill,Read More


Centralized Exchanges and Cryptocurrencies

Jul 26th, 2018 | Filed under: Emerging Asset Classes, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Commodities & Natural Resources

Cryptocurrencies are increasingly traded on centralized exchanges, such as Gemini and Coinbase. This fact itself has generated some resentment in the crypto world, because the very idea of  centralized exchange seems to violate the original anarchic animating spirit of the cryptocurrencies, even of “Satoshi” himself. Vitalik Buterin, who as the creatorRead More


Travails from the Crypt

Jul 23rd, 2018 | Filed under: Access to Alternatives, Newly Added, What About Beta?

Cryptography is the practice and study of hiding information. While that does not necessarily define cryptoassets, it does begin to underscore the challenges that need to be overcome before we can see wide institutional adoption. The issues around valuation, liquidity, regulation, and even speculation have grabbed many of the recent headlines, but it might be the more boring world of custody and safekeepingRead More


BarclayHedge Numbers Show Cryptocurrency Dive

Jul 19th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds, Commodities & Natural Resources

BarclayHedge says that its flash estimate for the Barclay CTA Index shows a 0.05% loss in June, and a 2% loss year to date. More remarkably, the flash estimate shows a 16.23% drop in June and a 45.43% drop YTD for the CryptoCurrency Traders Index. The founder and president ofRead More


Chain Blockers

Jul 16th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Newly Added, What About Beta?

By Bill Kelly, CEO, CAIA Association The base case for distributed ledger technology (or DLT, and often used interchangeably with blockchain) is to create a trusted network of participants where there is just one ledger of account records shared by all and there is no central recordkeeper. Transactions are digitalRead More


Justice Anthony Kennedy and Securities Law

Jul 10th, 2018 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added

When Justice Kennedy announced that he is stepping down from the US Supreme Court, the profiles of his time on that bench said a good deal about abortion, homosexual rights, and other hot-button issues, but relatively little about Kennedy’s contribution to securities law. Yet it is worth remembering that heRead More


The Crypto ‘Bubble’ as Seen From Boston College

Jul 5th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Two scholars affiliated with Boston College, Carroll School of Management, have published a study of initial coin offerings (ICOs), that has given a mixed verdict on the common contention that cryptocurrencies in general and ICOs in particular constitute a “bubble” akin to, say, 17th century tulips or the mortgage derivativesRead More


The Efficiency of the Markets in Crypto-Currencies

Jun 28th, 2018 | Filed under: Emerging Asset Classes, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

Three scholars affiliated with Johns Hopkins have evaluated cryptocurrency investing, in a new paper available at SSRN, and have concluded that “near-term cryptocurrency markets are semi-strong form efficient.” That bit of finance theorist jargon means that all publicly available information gets discounted quickly into an asset’s price, so that neitherRead More


A Talk on the What and Whys of Cryptocurrencies

Jun 20th, 2018 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation

The Battle of the Quants came to New York City on Wednesday, June 20, and the CAIA Association was one of its media sponsors. Much of the event involved cryptocurrencies, including an exchange between John D’Agostino (the global head of investor engagement at DMS Governance) and Nouriel Roubini, Chairman ofRead More