Browsing: Featured Post

Featured Post

Responsible Investment – Are You Ready?

Mar 30th, 2021 | Filed under: Newly Added, ESG, SRI and Clean Energy, Risk Management & Operations

By Maria Long, Content Director, The Standards Board for Alternative Investments (SBAI) Responsible Investment (“RI”), also known as ESG Investing or Sustainable Investing, is a growing area of interest for asset managers, allocators, and regulators. Historically RI was associated with value-based exclusions of specific securities or sectors from a portfolio,Read More


Are Investors Overpaying for Liquidity With Residential MBS Bonds?

Mar 26th, 2021 | Filed under: Debt Types of Private Equity, Newly Added, The Alts Industry

By Jan Brzeski, Managing Director and Chief Investment Officer, Arixa Capital Investors are desperate for yield, a fact that is well known by investment professionals everywhere. Yields have trended down steadily for decades, causing Wall Street to look further and further from the mainstream to find new types of loans toRead More


Bitcoin and Ethereum Derivatives – A First Step for Institutions?

Mar 23rd, 2021 | Filed under: Newly Added, Institutional Investing, What about beta?, Digital currencies, The Alts Industry, Commodities

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director of Content Strategy, CAIA Association In February 2020, IPE asked whether the $200 billion cryptocurrency market was of interest to institutional investors. While the premise was tempting, few institutions made the allocation, due to challenges and uncertainty in custody while questioningRead More


Alternative Data: The Gateway to Global Markets

Mar 21st, 2021 | Filed under: Newly Added, The Alts Industry

By Tom Nigro, Head of North America at GTCOM-US The COVID-19 pandemic and its vast impact have pushed businesses in all industries to adapt. When it comes to the investment landscape, we’ve seen an influx of data-driven investors and analysts looking to increase the sheer level of information they’re utilizingRead More


Exploring the Potential of Tokenisation in Alternative Investments

Mar 18th, 2021 | Filed under: Newly Added, Digital currencies, The Alts Industry, Private Investments, Real Assets

By Joanne Murphy, Managing Director, APAC, CAIA Association and Wu Guowei Jack, CFA, Director, Content APAC, CAIA Association Retail investors increasingly understand the risk profile associated with alternative investments and are interested in actively allocating to them. They are also more willing to lock up their capital for the longerRead More


What Hedge Fund Risk Systems Don’t See

Mar 16th, 2021 | Filed under: Hedge Fund Operations and Risk Management, Newly Added, Risk Management Strategies & Processes, Hedge Funds, Risk Management & Operations

By Linus Nilsson and Rikard Lundgren Many investors, trading floor managers, fund of fund allocators, and risk managers have experienced unexpectedly large losses that were not predicted by their risk management systems. Seemingly out of the blue, a safe portfolio can generate large losses for reasons that had not beenRead More


Real Estate Debt and Sustainability

Mar 14th, 2021 | Filed under: Real Estate, Infrastructure, Industry Size & Managers, Socially responsible investing, Alternative energy, Operationally Intensive Real Assets, ESG, Climate change, Real Estate Equity Investments

A new report from two executives at Aviva Investors, the global asset manager that is part of the UK-based Aviva Group, looks at real estate debt as a way to play the transition to a low-emissions or even a no-net-emissions world. One key source of value here is that theRead More


Breaking the Fourth Wall of ESG

Mar 14th, 2021 | Filed under: Newly Added, Socially responsible investing, What about beta?, Risk Metrics and Measurement, ESG, Climate change

By Aaron Filbeck, CFA, CAIA, CIPM, FDP, Director of Global Content Development at CAIA Association “In a real magic act, everything is fake.” – Wanda Maximoff, WandaVision (2021) A harmless phrase used in the latest addition to the Marvel Cinematic Universe, WandaVision. The protagonist, Wanda Maximoff, has created a false reality byRead More


Axe Capital and Spartan-Ives: The Impact of Prime Broker Relationships

Mar 11th, 2021 | Filed under: Hedge Fund Industry Trends, Hedge Fund Operations and Risk Management, Hedge Fund Strategies, Newly Added, Hedge Funds

By Hossein Kazemi, PhD, CFA, CAIA Association, FDP Institute, and Isenberg School of Management Introduction Bobby Axelrod had a good day on June 10, 2018. On this day, Axe Capital’s manager took the podium in front of a group of institutional and high-net-worth investors to pitch his fund. Thirty minutesRead More


Targeted Strategies for Managing Carbon Risk

Mar 9th, 2021 | Filed under: Newly Added, Socially responsible investing, Climate change, SRI and Clean Energy

“Decarbonizing Everything,” a new study from George Serafeim of Harvard Business School and four executives with State Street Associates looks for ways investors can combine qualitative and quantitative measures to develop targeted strategies that will both manage climate risk and increase risk-adjusted returns. Three Metrics: OC, TVC, AR The paperRead More


European Green Deal: Challenges and Opportunities for Listed Real Estate

Mar 4th, 2021 | Filed under: Real Estate, Liquid and Fixed Income Real Estate, Newly Added, ESG, Real Estate Equity Investments

By Jana Bour, LL.M., EU Policy Manager at the European Public Real Estate Association (EPRA) With the ‘European Green Deal’ (EGD), as with every growth-oriented policy strategy, come challenges but also opportunities. The European Commission aims to transform our continent to achieve net-zero emissions of greenhouse gases in 2050. WhileRead More


The Art of Due Diligence, Part II: The Good News for Emerging Managers

Mar 2nd, 2021 | Filed under: Due Diligence Process, Newly Added, Asset Managers, Operations, Institutional Asset Management, Risk Management Strategies & Processes, Risk Management & Operations

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, Content Strategy, CAIA Association, and Mark S. Rzepczynski, PhD, CEO, AMPHI Research and Trading Managing alternative assets is especially competitive for small and emerging managers. At the end of 2020, HFR data shows that the private hedge fund industry had $3.6Read More


Reaching for Yield in Decentralized Finance

Feb 28th, 2021 | Filed under: Newly Added, Digital currencies

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, Content Strategy, CAIA Association With junk bonds yielding less than 4% and sovereign debt ranging in yields from negative to 2%, investors have been settling for meager yields in bank deposits and the bond market. The revolution in decentralized finance (DeFi)Read More


Do Private Equity Alternative Vehicles Benefit Some LPs More Than Others?

Feb 25th, 2021 | Filed under: Private Equity, Newly Added

By Josh Lerner, Jacob H. Schiff Professor of Investment Banking at the Harvard Business School This post summarizes the following study, which is forthcoming in the Journal of Financial Economics: Lerner, Josh and Mao, Jason and Schoar, Antoinette and Zhang, Nan R., Investing Outside the Box: Evidence from Alternative Vehicles in PrivateRead More


The Art of Due Diligence, Part I: The Story Beyond the Numbers

Feb 25th, 2021 | Filed under: Hedge Fund Operations and Risk Management, Due Diligence Process, Newly Added, Operations, Risk Management Strategies & Processes, Hedge Funds, Private Investments, Risk Management & Operations

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, Content Strategy, CAIA Association and Mark S. Rzepczynski, PhD, Founding Partner and CEO, AMPHI Research and Trading Given the reliance on quantitative analysis in asset allocation, some investors may be tempted to continue with a numerical approach when filling their assetRead More


Why Lagging Pensions Should Consider Private Debt

Feb 23rd, 2021 | Filed under: Debt Types of Private Equity, Newly Added, Institutional Investing, Venture capital, Private Investments

By Zack Ellison, CFA, CAIA and Guy Pinkman, CPPT Watch our recent webcast series co-hosted with the CAIA SoCAL Chapter to hear more from these authors. Watch the replay of Session 1, featuring Guy Pinkman, or register to join Session 2, featuring Zack Ellison, on March 2 at 9:00 amRead More


Enhancing an Income Portfolio with Factor Design

Feb 21st, 2021 | Filed under: Newly Added, Risk management, Asset Allocation Models, Risk Management Strategies & Processes

By Daniel Fang, CFA, CAIA, Lead Portfolio Manager at Emotomy, and Sabrina Bailey, CEO at Emotomy Interest Rates to Stay Lower for Longer Since the Great Financial Crisis, central banks across all major economies have kept interest rates low to stimulate economic growth (See Exhibit 1). This trajectory took aRead More


Hedging Your Bets on Cryptocurrencies

Feb 14th, 2021 | Filed under: Industry Size & Managers, Newly Added, Digital currencies, Emerging Alternative Investments

What is the most effective proxy-hedging instrument for the Bitcoin/USD market? A recent study by Dominique Guegan, affiliated with Université Paris, Panthéon-Sorbonne, and two other scholars tackles this question. The study reaches no definitive conclusion, except the negative one that there is no way Bitcoin can be “fully hedged becauseRead More


The Rationale for Investing in Exotic Alternative Investments Today

Feb 9th, 2021 | Filed under: Newly Added, Operationally Intensive Real Assets, Alternative Investments in Context, The Alts Industry, Private Investments

By Kevin R. Mirabile, CPA, DPS  The current rationale for investing in exotic alternative investments is based on a combination of stand-alone returns, risks and portfolio effects. Today, exotic alternative investments offer investors an opportunity to achieve many of the stand-alone and portfolio benefits that hedge funds and other typesRead More


The VIX Dog That Didn’t Bark

Feb 7th, 2021 | Filed under: Newly Added, Other Topics in Alts

By Rick Roche, CAIA In the story, “The Adventure of Silver Blaze”, Sherlock Holmes solves a mystery in part by when no one he’d spoken to during an investigation mentioned that they heard a dog bark the night a famous race horse was stolen and the horse trainer was killedRead More


Improving Time Travel in Long-Term Investing

Feb 4th, 2021 | Filed under: Newly Added, Technology, Alternative Investments in Context

By Ashby Monk and Dane Rook, Stanford Global Projects Center To succeed at investing, you must master time travel.[i] You need to be proficient at beaming yourself into a hypothetical future, and then analyzing the best route to get “there” from the actual “now.” And the route itself is crucial:Read More


Systemic Impact and ESG Investing in Smart Cities

Feb 2nd, 2021 | Filed under: Infrastructure, Newly Added, Artificial Intelligence, Operationally Intensive Real Assets, ESG, Other Topics in Alts

What is a smart city? By definition, a smart city is “a city that uses technology and data purposefully to make better decisions and deliver better quality of life.”  Technology is intricately embedded into the everyday life of city dwellers through network devices, applications, and widely distributed usage.  The combinationRead More


Keeping Digital Assets Stable with Stablecoins

Jan 28th, 2021 | Filed under: Currencies, Newly Added, The Global Economy & Currencies, Digital currencies

By Andrew Keenan, CAIA, CFA, CBP, Assistant Vice President at Credit Suisse INTRODUCTION The recent stratospheric rise of bitcoin and its compatriot altcoins has generated both intrigue and despair as a handful of big-name digital assets reached new apogees in 2021 with respect to price and market capitalization. In theRead More


Multi-Strategy Hedge Funds: Equity in a Different Shade?

Jan 26th, 2021 | Filed under: Hedge Fund Strategies, Newly Added, Hedge Funds

By Nicolas Rabener, CAIA, of FactorResearch (@FactorResearch) INTRODUCTION Investing in hedge funds is challenging as both strategies and fund structures are complex. Almost all strategies are cyclical, although not all are on the same cycle. For example, statistical arbitrage tends to perform best when volatility is high, however, that representsRead More


Lenders: Project Financing Availability is Key to EGD’s Success

Jan 24th, 2021 | Filed under: Real Estate, Infrastructure, Newly Added, Institutional Investing, Other Issues in Private Investments, Operationally Intensive Real Assets, ESG, Institutional Asset Management, Private Investments, Real Assets

EUPOPEAN GREEN DEAL – TOWARDS A ZERO-CARBON URBAN ENVIRONMENT, Part 5 By Christos Angelis, CAIA – Director at Masterdam This is the fifth article in this series. For Part 1, please click here. LENDERS TO PLAY A MAJOR ROLE IN THE SUCCESS OF EGD As discussed in previous articles, theRead More


Strategic Note: Improved Smile-Implied Hedging

Jan 21st, 2021 | Filed under: CAPM / Alpha Theory, Financial Economics Theory, Newly Added, Risk management, Risk Metrics and Measurement, Risk Management Strategies & Processes, Finance & Economics

A recent paper by two Canadian scholars looks to improve on the art of smile-implied option replication. Pascal Francois, of the HEC Montreal Department of Finance, and Lars Stentoft, of the University of Western Ontario, Department of Economics, begins with the observation that options can be dynamically replicated using model-freeRead More


What is DeFi?

Jan 19th, 2021 | Filed under: Derivatives, Newly Added, Fintech, Technology, Digital currencies, Emerging Alternative Investments, Other Topics in Alts

By Dan Eyre You may have heard about tech’s newest portmanteau in the last few months: DeFi. This is due to the meteoric rise in value of the related assets. This post will attempt to explain what DeFi is, and what the medium- to long-term impact will be. To understandRead More


Green Bonds: Going Green Fast

Jan 13th, 2021 | Filed under: Newly Added, Other Issues in Private Investments, ESG, Other Topics in Alts

By Aswini Bajaj, CA, CS, CFA, FRM, CAIA, CIPM, CCRA, CIRA, CIIB, AIM & Team Leveraged Growth Introduction Since the mid-20th century, mankind has faced the problem of self-induced climate change which has caused ecological havoc and is now also impacting the economy. The International Energy Agency (IEA) estimates thatRead More


The New ESG Guardians: Sovereign Investment Funds to Shape the Future Digital Economy

Jan 12th, 2021 | Filed under: Newly Added, Institutional Investing, ESG, Institutional Asset Management, Allocating to Alts, Other Topics in Alts

By Winston Ma, CFA & Esq – Adjunct Professor, NYU School of Law Who holds the power in financial markets? For many, the answer would probably be the large investment banks, big asset managers and hedge funds that are often in the media’s spotlight. But more and more a newRead More


The Often-Forgotten Art and Science of Manager Due Diligence

Jan 10th, 2021 | Filed under: Due Diligence Process, Newly Added, Risk Management & Operations

By Shana Sissel, CAIA – Chief Investment Officer of Spotlight Asset Group For almost two decades I have worked in roles that were heavily focused on investment manager due diligence across asset classes and legal structures. I began my career in due diligence-focused on the world of hedge funds. HedgeRead More


Private Equity and the Leverage Myth

Jan 6th, 2021 | Filed under: Private Equity, Debt Types of Private Equity, Newly Added, Asset allocation, Equity Types of Private Equity, Asset Allocation Models, Private Investments

By William Kinlaw, CFA This article offers commentary and highlights from “Private Equity and the Leverage Myth” by Megan Czasonis, William Kinlaw, Mark Kritzman and David Turkington in The Journal of Alternative Investments. You can read the full paper here.  The private equity market is on an astonishing growth trajectory.Read More


The Challenges—and Opportunities—of Chinese Distressed Debt

Jan 4th, 2021 | Filed under: Hedge Fund Strategies, Newly Added, Other Issues in Private Investments, Hedge Funds, Private Investments

By Dinny McMahon, Economic Advisor to ShoreVest For the last few years, China has been involved in a slow-moving cleanup of its banking system, creating vibrant distressed debt and special situations opportunities for investors. Those opportunities have been heightened by the pandemic which is forcing banks to accelerate their paceRead More


Why STOs are Not ICOs

Dec 27th, 2020 | Filed under: Newly Added, Fintech, The Global Economy & Currencies, Digital currencies, Other Issues in Private Investments, Emerging Alternative Investments, Other Topics in Alts

Security token offerings are not initial coin offerings. Three scholars affiliated with Erasmus University in Rotterdam explain the difference between the STO and the ICO markets in a new paper, contending that getting the distinction right is “crucial for the study of entrepreneurial finance.” The paper also sheds light onRead More


ESG and Its Growing Influence in the Timberland Investment Sector

Dec 17th, 2020 | Filed under: Private Equity, Newly Added, Natural Resources and Land, Other Issues in Private Investments, ESG, Commodities, Private Investments, Real Assets

By Chung-Hong Fu, Managing Director, Research Timberland Investment Resources, LLC As interest in Environmental, Social and Governance (ESG) issues increases, investors and investment managers are working to define and refine what ESG means and what ESG engagement looks like in the context of their portfolios and the asset classes inRead More


Hedge Fund Battle: Discretionary vs Systematic Investing

Dec 15th, 2020 | Filed under: Algorithmic and high-frequency trading, Hedge Fund Strategies, Newly Added, Alpha Strategies, Artificial Intelligence, Hedge Funds, Other Topics in Alts

By Nicolas Rabener, CAIA, Factor Research & Karl Rogers, ACE Capital Investments INTRODUCTION Anyone who has watched the hit TV show “Billions” will have noticed that the hedge fund billionaire Bobby Axelrod and his former lieutenant, and occasional nemesis, Taylor Mason have totally different trading styles. Bobby, although mathematically gifted,Read More


The Future of Hedge Funds: Timing!

Dec 13th, 2020 | Filed under: Hedge Fund Strategies, Newly Added, Alpha Strategies, Event-Driven Hedge Funds, Hedge Funds

There’s an old joke. Even, if you like, a meta-joke. It probably dates back to vaudeville, and it takes the form of an exchange between the stage comic and a selected victim from the audience. It goes like this: Comic: Today’s your lucky day. I’m going to tell you theRead More


Strategic Portfolio Construction with Private Equity

Dec 8th, 2020 | Filed under: Private Equity, Newly Added, Asset allocation, Equity Types of Private Equity, Asset Allocation Models, Other Issues in Private Investments, Private Investments

By Giulio Renzi-Ricci, Senior Investment Strategist, Vanguard  Investor interest in private equity has been rising over the last two decades. Today private equity represents a growing opportunity for multiasset portfolios, offering the potential to significantly outperform public investments. In a new research paper, we examine the role private equity canRead More


Our Commitment to Better Due Diligence in Alts

Dec 7th, 2020 | Filed under: Newly Added

In a year that’s lacked so much of what makes our global CAIA community special—namely, the in-person gatherings of local chapters and the knowledge sharing that takes place at our bigger events around the world—we strived to continue to engage our membership, gleaning their expert insights and exchanging the bestRead More


How Challenges in Commodity Trade Finance are Creating New Investment Opportunities

Dec 6th, 2020 | Filed under: Investing in Commodities, Newly Added, Other Issues in Private Investments, Commodities, Emerging Alternative Investments, Other Topics in Alts

By Annie Yung 2020 certainly has had many challenges across markets, and trade finance has been no exception. Trade finance is critical for global companies for support of operations and to enable the expansion of trade and growth. The COVID-19 pandemic has fueled a growing funding gap and has exposedRead More


European Green Deal: Towards a Zero-Carbon Urban Environment (Part 4)

Dec 3rd, 2020 | Filed under: Real Estate, Infrastructure, Newly Added, Socially responsible investing, Alternative energy, Operationally Intensive Real Assets, Alternative Investments in Context, ESG, Climate change, Emerging Alternative Investments, Private Investments, Real Assets, SRI and Clean Energy

Part 4: Real Estate Developers: Hostage of Trophy Hunting Investors & Certification Standards? By Christos Angelis, CAIA – Director at Masterdam This is the fourth article in this series. Please read Part 1, Part 2 and Part 3. THE RELEVANCE OF THE EUROPEAN GREEN DEAL FOR DEVELOPERS Real estate development in the EuropeanRead More


What Price Private Equity Returns?

Dec 2nd, 2020 | Filed under: Private Equity, Newly Added, Equity Types of Private Equity, Private Investments

What is the expected return on private equity? Not at the deal level, but in terms of the return on the underlyings for which actual market prices are not available? That is a tricky empirical question because, after all since we know that actual market prices are not available! AfterRead More


Structured Finance: Unleash the Inefficiency

Nov 29th, 2020 | Filed under: Derivatives, CDO Structuring and Credit RIsk, Newly Added, Credit Derivatives, CAIA Alternative Viewpoints, Structured Credit Products, Structured Products

By Shreekant Daga, CAIA, CFA, FRM What is structured finance? Finance has several theoretical traditional and modern frameworks in practice. Needless to say, often the frameworks have conflicting assumptions. The sub-prime mortgage crisis is a modern classic example. Data-reliant credit rating agencies (CRAs) had not seen such a large drawdownRead More


The New Generation of Behavioral Finance

Nov 26th, 2020 | Filed under: Newly Added, Risk management, Asset allocation, Behavioral finance, Socially responsible investing, Asset Allocation Models, ESG, Economics, Risk Management Strategies & Processes, Hedge Funds, Macroeconomics, Finance & Economics

Meir Statman, a professor of finance at Santa Clara University and a consultant to Avantis Investors, has focused his scholarly efforts for decades on behavioral finance, and those efforts have given us a recent book on the subject, Behavioral Finance: The Second Generation. In Statman’s view the first generation ofRead More


Measuring the Inflation Risk of Three ‘Inflation-Hedges’

Nov 24th, 2020 | Filed under: Newly Added, Risk management, The Global Economy & Currencies, ETFs, Economics, Risk Management Strategies & Processes, Macroeconomics, Commodities, Allocating to Alts, Finance & Economics

By Doris Bao, FRM and Alex Botte, CFA, CAIA, Client Solutions Research team at Two Sigma In our previous post on inflation, we covered how the Local Inflation risk factor in Venn, Two Sigma’s risk analytics platform, is constructed and we reviewed its historical performance. The primary conclusion was thatRead More


Growing a Green Decision Tree—Machine Learning and ESG

Nov 23rd, 2020 | Filed under: Newly Added, Technology, Artificial Intelligence, ESG, Machine Learning, Other Topics in Alts

Assuming that the growth of environmental, social, and governance-based investing is not yet at, but is approaching, a tipping point, and assuming that knowing that tipping point with precision will yield alpha, can machine learning help find it? That is the question posed in a recent paper by the globalRead More


Starting Early: The Growing Need for Financial Literacy in the United States

Nov 22nd, 2020 | Filed under: Retail Investing, Newly Added, Alternative Investments in Context, Allocating to Alts, Other Topics in Alts

Dr. Greg Filbeck, CFA, FRM, CAIA, CIPM, PRM Investors are increasingly looking toward the private markets as an output for their investment dollars to increase risk-adjusted performance. Historically, such direct investment required an investor to qualify as an accredited investor. Recently, guidelines to qualify as an accredited investor have broadenedRead More


Keynes vs. Markowitz ‘Thrilla in Portfolia’

Nov 19th, 2020 | Filed under: CAPM / Alpha Theory, Financial Economics Theory, Newly Added, Risk management, Asset allocation, CAIA Alternative Viewpoints, Asset Allocation Models, Risk Management Strategies & Processes, Hedge Funds, Finance & Economics

By Hossein Kazemi, PhD, CFA, CAIA Association, FDP Institute, and Isenberg School of Management Introduction While Keynes vs. Markowitz is not as thrilling as Ali vs. Frazier, it has important implications for investors when selecting funds and investment managers when constructing portfolios.  In this “fight,” we have in one cornerRead More


What Is the Future of Alternatives?

Nov 17th, 2020 | Filed under: Private Equity, Newly Added, Institutional Investing, Asset allocation, Asset Allocation Models, ESG, Institutional Asset Management, Hedge Funds, Private Investments, Other Topics in Alts

By Grant Murgatroyd, senior writer EMEA at Preqin Preqin predicts that alternative assets under management will rise to $17.2 trillion in 2025. We believe the COVID-19 induced slowdown in 2020 will be temporary and lead to a larger, more efficient, and more sustainable industry. Assets under management (AUM) in alternativesRead More


A Renewal of the Value Factor in Equities

Nov 12th, 2020 | Filed under: CAPM / Alpha Theory, Newly Added, Finance & Economics

David Blitz, the head of quant research at Robeco, and Robeco researcher Matthias Hanauer have posted a commentary on the value factor. This is one of the classic Fama-French factors. It began life in 1992 as a simple “high minus low” (HML) calculation; the postulation that stocks with high book-to-marketRead More


Markets in the Rear-View Mirror: COVID-19 Collision

Nov 10th, 2020 | Filed under: Newly Added, The Global Economy & Currencies, Alternative Investments in Context, Economics, Macroeconomics, Finance & Economics

By Mike Nigro, Managing Director and Head of Client Solutions Research at Two Sigma and Doris Bao, FRM, Quantitative Researcher on the Client Solutions Research team at Two Sigma During recent months, the COVID-19 pandemic has reshaped the world, causing devastating damage to the global economy. The world is nowRead More