Browsing: Featured Post

Featured Post

Why Alternative Investment Operations Still Matter

Oct 20th, 2020 | Filed under: Hedge Fund Industry Trends, Hedge Fund Operations and Risk Management, Private Equity, Due Diligence Process, Newly Added, Risk management, Operations, Funds of Hedge Funds, Risk Management Strategies & Processes, Hedge Funds, Private Investments, Risk Management & Operations

By Jason Scharfman Esq., CFE, CRISC, CAMS, CAIA Managing Partner, Corgentum Consulting As an operational due diligence (ODD) professional who performs ODD reviews of alternative investment managers on behalf of institutional investors and family offices, I have noticed a recent increase not only in the number of ODD reviews investorsRead More


It Isn’t The Strategy: It’s the Execution that Gets You to Alpha

Oct 18th, 2020 | Filed under: Private Equity, Newly Added, Private Investments

A recent study of private equity, available as a working paper by the European Bank for Reconstruction and Development, seeks to open what the authors see as the “black box of value creation” in private equity. What they find inside the box is this: “[It] is not the ex-ante selectionRead More


Don’t Get Carried Away by Carry

Oct 15th, 2020 | Filed under: Newly Added, Alpha Strategies, The Global Economy & Currencies

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION There are folks in finance who know and folks who don’t know. The latter group often drives the former crazy by abusing terminology. For example, moderators and guests on CNBC talking about momentum and growth stocks as if they were the same thing.Read More


Three Sources of Alpha: A Call for Small Manager Investment

Oct 13th, 2020 | Filed under: CAPM / Alpha Theory, Hedge Fund Strategies, CTA, Investing in Commodities, Equity Hedge Funds, Newly Added, Seeding/early-stage, Macro and Managed Futures Funds, Hedge Funds, Commodities, Finance & Economics

By Karl Rogers, ACE Capital Investments I recently finished a multi-strategy fund of hedge funds build for an institution where I focused on three sources of alpha: small manager, equities and commodities. Small Manager Alpha Given that “small” managers have been found to outperform their larger peers[1], why do manyRead More


How Green is the Cannabis Trade?

Oct 12th, 2020 | Filed under: Newly Added, The Global Economy & Currencies, Emerging markets, Frontier markets

Last week we looked at recent developments in the state-legal marijuana markets. Among the observations we made there, these three stand out: Marijuana is becoming an essential business and a permanent feature of the landscape, surviving crises and helping the portfolios of investors do the same; The major players areRead More


European Green Deal: Towards a Zero-carbon Urban Environment

Oct 8th, 2020 | Filed under: Real Estate, Liquid and Fixed Income Real Estate, Newly Added, Natural Resources and Land, Other Issues in Private Investments, Alternative Investments in Context, Real Estate Equity Investments, Private Investments, Real Assets

Part 2: Real Estate Owners: Moral Obligation versus Economic Benefit CHRISTOS ANGELIS, CAIA – Director at Masterdam This is the second article in this series. For Part 1, please click here. EUROPEAN RENOVATION WAVE The European Green Deal (EGD)[i] is paving the way for stricter regulations and more applied measuresRead More


The Alternative Imperative, Part 1

Oct 6th, 2020 | Filed under: Algorithmic and high-frequency trading, Hedge Fund Strategies, Newly Added, Alternative data, Technology, Artificial Intelligence, Alternative Investments in Context, Machine Learning, Hedge Funds, Other Topics in A.I.

By Rick Roche, CAIA, Managing Director of Little Harbor Advisors, LLC Part 1 of a two-part series on Alternative Investment Data (Alt-Data) in the COVID Era. In Part 1, the author makes the case for high-frequency, short-interval Alt-Data while discussing three primary drawbacks of interpreting official economic statistics amid aRead More


Introduction to Insurance-Linked Securities

Oct 5th, 2020 | Filed under: Newly Added, Credit Derivatives, Structured Credit Products, Structured Products, Other Topics in A.I.

By Chin Liu, Director of Insurance Linked Securities and Quantitative Research, Portfolio Manager; Campbell Brown, Portfolio Manager;  and Joe Morgart, Client Portfolio Manager,  at Amundi Pioneer Insurance-linked securities (ILS) is an alternative asset class offering investors the potential for attractive risk-adjusted returns and desirable diversification1 benefits. This overview describes aRead More


What is Becoming Manifest about Cannabis?

Oct 4th, 2020 | Filed under: Newly Added, Frontier markets, Private Investments, Other Topics in A.I.

Consumers in the United States are expected to purchase US$10 billion in state-legal cannabis by the end of this year. This makes it a new emerging growth market at a time when so many other markets are contracting or failing altogether under the weight of the pandemic and other economicRead More


Innovation Isn’t an Accident

Sep 30th, 2020 | Filed under: Private Equity, Newly Added, Venture capital, Angel investing, Other Issues in Private Investments, Private Investments

By Sloane Ortel How does innovation happen? For many people in the investment community that answer is sort of fuzzy. We might think it just happens, which is effectively the same as believing inventions are delivered by storks when a creator and a source of capital love each other veryRead More


Subscription Line of Credit: Benefits, Risks, and Distortions

Sep 29th, 2020 | Filed under: Private Equity, Debt Types of Private Equity, Newly Added, Equity Types of Private Equity, Private Investments

By Hossein Kazemi, PhD, CFA, CAIA Association, FDP Institute, and Isenberg School of Management A subscription line of credit (SLC) is one of many sources of funding that general partners (GPs) can use to invest, manage, size, and time a private equity fund’s cash flow. By far, the largest sourceRead More


VCs: Looking at a Future of Digital Therapeutics

Sep 28th, 2020 | Filed under: Newly Added, Venture capital, Equity Types of Private Equity

A Pitchbook report indicates that the venture capital presence in the digital therapeutics industry has increased geometrically since 2015, going from an investment of $134.3 million in that year to $1.2 billion in 2019. Further, the report suggests that digital therapeutics (DTx) is going to get bigger and more profitableRead More


India: An Alternative Investment Industry Growth Story

Sep 27th, 2020 | Filed under: Real Estate, Industry Size & Managers, Newly Added, CAIA Alternative Viewpoints, Alternative Investments in Context, Hedge Funds, Private Investments

By Shreekant Daga, CAIA, CFA, FRM – Associate Director of Industry Relations, India at CAIA Association & Guowei Jack Wu, CFA – Director of Content, APAC at CAIA Association Through August-September 2020, CAIA Association hosted a 10-part educational webinar series titled 10 Lessons in Finance. The event brought together academics fromRead More


Missed Rents’ Impact on Real Estate

Sep 24th, 2020 | Filed under: Real Estate, Newly Added, Real Estate Equity Investments, Real Assets

By Niel Harmse & Bryan Reid of MSCI Real Estate Lockdowns and social distancing have impacted many tenant businesses, resulting in an unprecedented number of requests for rental relief, stressing real estate rental income streams. For equity investors, income returns have weakened, despite softening asset values. Recent income returns mayRead More


Retirement’s Mid-Life Crisis

Sep 22nd, 2020 | Filed under: Private Equity, Newly Added, Institutional Investing, Asset allocation, Asset Allocation Models, Other Issues in Private Investments, Alternative Investments in Context, Institutional Asset Management, Hedge Funds, Private Investments, Allocating to A.I.

By Rob Croce, PhD – Managing Director and Portfolio Manager at Mellon & Aaron Filbeck, CAIA, CFA, CIPM – Associate Director of Content Development at CAIA Association In 2000, United States 10-year government bonds rates were 6% and the median U.S. public pension plan had an actuarial return assumption ofRead More


CONNECTING THE DOTS WITH AI AND KNOWLEDGE GRAPHS

Sep 20th, 2020 | Filed under: Newly Added, Alternative data, Artificial Intelligence, CAIA Alternative Viewpoints, Machine Learning, Other Topics in A.I.

By Mehrzad Mahdavi, PhD, Executive Director, FDP Institute Imagine if your social media posts or articles were generated automatically by AI as if they were authored by you…well, that day is here! The next generation of NLP called “Generative Pre-trained Transformer, third generation”, or GPT-3, was recently released for betaRead More


Emerging Market Debts (or Funds) as a Weakened-Dollar Bet

Sep 15th, 2020 | Filed under: Newly Added, The Global Economy & Currencies, Emerging markets, Other Issues in Private Investments, Finance & Economics

A new report by the William Blair Funds illustrates why some investors may see emerging-markets debt as a good play over the near future, especially if the assets of the funds are denominated in the local currency. That is a play on dollar weakness. The report uses the JPMorgan GovernmentRead More


The Case for Redefining the Risk-free Asset

Sep 13th, 2020 | Filed under: CAPM / Alpha Theory, Financial Economics Theory, Newly Added, Finance & Economics

The quantitative analysis of markets, and of the performance of fund managers, is in large part the mathematical treatment of various (often contested) metrics of risk. Let us bring two points about risk into collision. First, over more than three decades scholars have debated the “equity premium puzzle.” Why doRead More


AI, What Have You Done for Me Lately?

Sep 10th, 2020 | Filed under: Newly Added, Fintech, Artificial Intelligence, ETFs, Machine Learning, Hedge Funds, Allocating to A.I., Other Topics in A.I.

By Nicolas Rabener of FactorResearch (@FactorResearch) INVESTING IN AI VERSUS AI INVESTING “AI will probably most likely lead to the end of the world, but in the meantime, there’ll be great companies.” – Sam Altman If investors are looking for that one great AI company that will also end theRead More


Humans are Not Obsolete: We Bring the Razor

Sep 9th, 2020 | Filed under: Newly Added, Fintech, Artificial Intelligence, Machine Learning, Other Topics in A.I.

Artificial intelligence, understood in a broad sense to include Big Data and machine learning, is a vast as-yet unplumbed disruption for portfolio management and trading as for so much else. People are still trying to get a handle on it. These are fields in which there is a great dealRead More


Volatility Hedge Funds: The Good, the Bad, and the Ugly

Sep 3rd, 2020 | Filed under: Hedge Fund Strategies, Equity Hedge Funds, Newly Added, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION In finance 101, there is usually little doubt on what constitutes the major asset classes in the investment industry, i.e. there are the traditional ones like equities or fixed income as well as alternatives like real estate or private equity. The instruments ofRead More


ESG Hedge Fund Managers and the Agency Problem

Sep 1st, 2020 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Newly Added, ESG, Hedge Funds, Other Topics in A.I.

Economists in general, and scholars of finance in particular, have long been concerned with the “agency problem,” the conflict of interest inherent in any relationship where X is expected, and perhaps required by law or contract, to act in the best interest of Y. The problem exists because, for example,Read More


Traditional vs. Modern Approaches to Shipping Markets: Gut Instinct vs. Data-Driven 

Aug 30th, 2020 | Filed under: Newly Added, Other Topics in A.I.

By Richard Stephenson, CAIA – Executive Chairman at TonnEdge, and Director at Gestion Maritime Group Introduction by Alessandro Sanos, CAIA – Global Director, Commodities at Refinitiv Introduction With its silent efficiency, shipping is rarely in the spotlight. To the uninitiated, this industry could be perceived as a marginal market, butRead More


The calm before the (next) storm?

Aug 27th, 2020 | Filed under: Newly Added, The Global Economy & Currencies, Economics, Macroeconomics, Finance & Economics

By Kara O’Halloran, FS Investments The dog days of summer are upon us. While August has historically brought volatility to markets, equities in 2020 appear to have shrugged off their typical late-summer doldrums, posting solid gains to start the month. However, some warning signs are flashing of possible bumps ahead.Read More


Don’t count on multiple expansion and leverage anymore

Aug 25th, 2020 | Filed under: Private Equity, Debt Types of Private Equity, Newly Added, CAIA Alternative Viewpoints, Private Investments

By Wu Guowei Jack, CFA – Director of Content, APAC at CAIA Association Late Cycle Risks In the private markets world, the term “late cycle risks” has been much bandied about in recent years. A combination of high-entry multiples, high leverage, and a record amount of dry powder no doubtRead More


IS DOWNSIDE RISK PRICED IN CRYPTOCURRENCY MARKET?

Aug 23rd, 2020 | Filed under: CAPM / Alpha Theory, Newly Added, Risk management, Digital currencies, Risk Management Strategies & Processes, Emerging Alternative Investments, Finance & Economics

By Victoria Dobrynskaya, PhD, associate professor of Finance at National Research University Higher School of Economics Looking at the whole cryptocurrency market through the prism of standard multi-factor asset-pricing models reveals that there is a significant heterogeneity in the exposure to the downside market risk across coins, and that aRead More


EUROPEAN GREEN DEAL: TOWARDS A ZERO-CARBON URBAN ENVIRONMENT

Aug 20th, 2020 | Filed under: Newly Added, Socially responsible investing, The Global Economy & Currencies, Alternative Investments in Context, ESG, Economics, Climate change, Macroeconomics, SRI and Clean Energy, Finance & Economics, Other Topics in A.I.

Part 1 of a multi-part series: The Role of the EU, National Governments & Local Authorities By Christos Angelis, CAIA – Director at Masterdam INTRODUCTION In light of the exciting developments in the European Union regarding the European Green Deal (EGD)[1] presented in the end of 2019, it would beRead More


What Covid-19 Teaches Us About Resilience

Aug 18th, 2020 | Filed under: Newly Added, ESG, Macroeconomics, Other Topics in A.I.

In late February and early March, we witnessed what the European Corporate Governance Institute calls an “an exogenous and unparalleled” crash, during which the S&P 500 shed one-third of its value, dropping from approximately 3,300 on Feb. 20 to close at 2,200 one month later. This provided a natural experimentRead More


Is the US Stock Market Overvalued? A Back-of-the-Envelope Calculation

Aug 16th, 2020 | Filed under: Performance, Analytics & Metrics, Financial Economics Theory, Newly Added, The Global Economy & Currencies, Economics, Macroeconomics, Finance & Economics

By Hossein Kazemi, The CAIA Association & The Isenberg School of Management In recent weeks, hundreds of research reports and many more blogs and commentaries have discussed the current valuation of the US stock market.  With the economy in a recession and corporate profits and GDP down by double digits,Read More


The Coming Oil Crisis

Aug 13th, 2020 | Filed under: Commodities, Newly Added, oil, Commodities: Examples, Energy, Commodities

Excerpted of Goehring & Rozencwajg, Natural Resource Investors We are on the cusp of a global energy crisis. Like most crises, the fundamental causes for this crisis been brewing for several years but have lacked a catalyst to bring them to the attention of the public or to the averageRead More


Applying Occam’s Razor to Factor Analysis

Aug 12th, 2020 | Filed under: Newly Added, Asset allocation, Asset Allocation Models, Allocating to A.I.

By Alex Botte, CFA, CAIA, Vice President, Two Sigma The principle of Occam’s razor states that, in searching for explanations or solutions to problems, “entities should not be multiplied unnecessarily.” If one has various models that arrive at the same outcome, one should choose the one with the fewest assumptions. InRead More


This May Not Be the Apocalypse After All

Aug 9th, 2020 | Filed under: Hedge Fund Industry Trends, Financial Economics Theory, Newly Added, The Global Economy & Currencies, Hedge Funds, Macroeconomics, Finance & Economics

From the point of view of the alternative investment world, the dramas associated with the year 2020 may not constitute as apocalyptic a challenge or as paradigmatic a shift as is commonly thought. It may even be considered, in many respects, business as usual (aside from an occasional “murder hornet.”)Read More


Putting 2020 into Perspective: Diversification May Work Better than You Think

Aug 6th, 2020 | Filed under: CAPM / Alpha Theory, Financial Economics Theory, Newly Added, Risk management, Asset allocation, Asset Allocation Models, Alternative Investments in Context, Institutional Asset Management, Risk Management Strategies & Processes, Hedge Funds, Allocating to A.I.

By Rodney Sullivan, CFA, CAIA, Executive Director, University of Virginia Darden School of Business US recessions are typically accompanied by declines in stock market returns and, of course, 2020 has been no exception. We are once again reminded that investing is not easy leaving many investors to wonder how bestRead More


Will the DOL Decision on Private Equity Impact the Democratization of Alternative Investments?

Aug 4th, 2020 | Filed under: Retail Investing, Private Equity, Newly Added, Asset allocation, Equity Types of Private Equity, Asset Allocation Models, Liquid Alternative Investiments, Private Investments, Allocating to A.I.

By Rashad Kurbanov, CEO & Co-Founder at iownit capital and markets Alternative investments have been around for decades and have been a part of institutional investment portfolios for the majority of the time. Institutional investors have increasingly allocated their investment capital to these investments with an expectation that they willRead More


Transparency…Democracy…Liquidity

Aug 2nd, 2020 | Filed under: Newly Added, Fintech, Technology, Other Topics in A.I.

The structure of financial markets has changed substantially since the 2014 publication of Michael Lewis’ Flash Boys. Much that was shocking and new then is now taken for granted. Also, the world of investments is in a sense more democratic now, with Robinhood transforming the model of retail investing, andRead More


Understanding the Limitations of Liquid Alternatives

Jul 30th, 2020 | Filed under: Retail Investing, Hedge Fund Strategies, Newly Added, Alternative Mutual Funds, 130/30, Liquid Alts, Alternative Investments in Context, Smart Beta, Hedge Funds, Liquid Alternative Investiments, Allocating to A.I.

By Shana Sissel, CAIA, Spotlight Asset Group More than a decade ago the world of alternative investments witnessed hedge-fund-inspired Investment Act of 1940 (40 Act) funds appear on the scene. Much like their private alternative counterparts, liquid alternatives offer valuable diversification benefits within traditional portfolios, but it’s important to keepRead More


What’s the Difference Between Momentum and Trend Following?

Jul 29th, 2020 | Filed under: Newly Added, Alpha Strategies, Hedge Funds

By Alex Botte, CFA, CAIA, Vice President, Two Sigma At the end of 2019, Two Sigma’s Venn platform added three new macro style factors to its risk model, the Two Sigma Factor Lens: Fixed Income Carry, Foreign Exchange Carry, and Trend Following. The first two factors are meant to capture anRead More


Hedge Funds and Private Equity—Building Bridges—Or Not

Jul 27th, 2020 | Filed under: Private Equity, Debt Types of Private Equity, Newly Added, Asset Managers, Institutional Investing, Venture capital, Asset allocation, Equity Types of Private Equity, Asset Allocation Models, The A.I. Industry, Institutional Asset Management, Hedge Funds, Private Investments

Alternative investment managers were evolving in the context of changing market conditions even before the Covid-19 pandemic, although the virus has speeded up the process. What is emerging is an alternatives landscape where pure-play hedge funds will be rare. That is one of the conclusions of a new study byRead More


An ‘Alternative’ Safe-Haven

Jul 26th, 2020 | Filed under: Performance, Analytics & Metrics, Newly Added, Risk management, Asset allocation, Asset Allocation Models, Risk Metrics and Measurement, Risk Management Strategies & Processes, Allocating to A.I.

By Karl Rogers, ACE Capital Investments Abstract: The sovereign bond market has traditionally been a widely used tool for portfolio construction given its dual characteristics of returning a real yield with a negative correlation to equity markets – providing both a real return expectancy and portfolio protection. Given the zero-lower-boundRead More


Global Macro: Masters of the Universe?

Jul 23rd, 2020 | Filed under: Hedge Fund Strategies, Newly Added, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION He-Man and the Masters of the Universe was a popular TV cartoon show in the 1980s, where a handsome Prince Adam was battling the evil Skeletor for control of the universe. Each time Prince Adam held the Sword of Power and boomed “ByRead More


Real Estate and COVID-19: The Devil Is in the Dispersion

Jul 22nd, 2020 | Filed under: Real Estate, Newly Added, Real Estate Equity Investments

By Fritz Louw and Niel Harmse The recent market turmoil has resembled the global financial crisis and other volatile periods, in that we have observed a widening of the dispersion of returns across real estate assets. This widening spread has been most pronounced in retail property — a sector thatRead More


Impact Investing Won’t Save Capitalism, But Its Example Might

Jul 22nd, 2020 | Filed under: Private Equity, Social investing, Newly Added, Asset allocation, Socially responsible investing, Equity Types of Private Equity, Asset Allocation Models, Other Issues in Private Investments, ESG, Private Investments, SRI and Clean Energy, Other Topics in A.I.

By Michael O’Leary and Warren Valdmanis GIIN’s 10th Anniversary report highlights new records, but what’s the endgame? When the Global Impact Investing Network (GIIN) issued its first survey a decade ago, the term “impact investing” had only been coined three years earlier. Just 24 investors responded. In GIIN’s tenth anniversaryRead More


Seeking to Predict Recessions? Focus on the Forest—Not the Trees

Jul 21st, 2020 | Filed under: Newly Added, Alternative data, Artificial Intelligence, CAIA Alternative Viewpoints, Alternative Investments in Context, Machine Learning, Other Topics in A.I.

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, CAIA Association The FDP Institute recently spoke with Al Yazdani, the chief data scientist and founder of Calcolo Analytics, regarding his forthcoming article in the Journal of Financial Data Science: “Machine Learning Prediction of Recessions: An Imbalanced Classification Approach.” The authorRead More


Canadian Farmland – Feeding the World in a Changing Climate

Jul 19th, 2020 | Filed under: Agriculture, Newly Added, Farmland, Natural Resources and Land, Real Assets

By Joelle Faulkner, Founder and CEO & Max Pentland, Analyst, Area One Farms As our climate and population are rapidly changing on a global scale, Canadian farmland appears to be  an increasingly attractive investment. Rising populations and temperatures will likely cause farmland values in Canada to appreciate, driven by demand for agriculturalRead More


Socially Distant Inflation

Jul 16th, 2020 | Filed under: Newly Added, The Global Economy & Currencies, CAIA Alternative Viewpoints, Alternative Investments in Context, Finance & Economics

By Keith Black, PhD, CFA, CAIA, FDP As the COVID-19 lockdowns start to ease across the country, governmental entities often have phased approaches for opening. Smaller crowds, smaller businesses, and more socially distanced activities are the first to reopen. It may take until 2021, at the earliest, to return toRead More


Technology: Aiding and Abetting the Democratization of Alternative Investments

Jul 14th, 2020 | Filed under: Hedge Fund Industry Trends, Private Equity, Hedge Fund Strategies, Newly Added, Fintech, Venture capital, Technology, Artificial Intelligence, Other Issues in Private Investments, Machine Learning, Hedge Funds, Private Investments, Other Topics in A.I.

A recent working paper for the European Corporate Governance Institute maintains that technology has the potential to make hedge funds and private equity more accessible to the retail investor. The paper, by Omololu Bajulaiye of Tilburg University, along with some other scholars begins with the non-controversial proposition that venture capital,Read More


A CLO-ser look at structured products

Jul 12th, 2020 | Filed under: Derivatives, Newly Added, Credit Derivatives, Structured Credit Products, Structured Products

By Robert Hoffman, Managing Director, Investment Research and Kara O’Halloran, Associate, Investment Research, FS Investments Structured products are no stranger to the limelight. Once only garnering interest from niche Wall Street trading floors, collateralized debt obligations (CDOs) and mortgage-backed securities (MBS) have become household names, as these products were cited asRead More


Changes are coming

Jul 12th, 2020 | Filed under: Newly Added, Fintech, Technology, Artificial Intelligence, CAIA Alternative Viewpoints, Machine Learning, Other Topics in A.I.

This article was co-authored by Dr Mehrzad Mahdavi and Hossein Kazemi, Phd, CFA from FDP Institute, and William J. Kelly from CAIA Association Digital transformation, with artificial intelligence and machine learning technologies at its core, has created unprecedented challenges and opportunities across all industries.  The financial sector will be profoundly affected as demonstrated by numerous use casesRead More


Looking For Sustainability in Energy SDG Credits

Jul 9th, 2020 | Filed under: Newly Added, Socially responsible investing, ESG, SRI and Clean Energy, Finance & Economics, Other Topics in A.I.

A new report by two analysts at Robeco discusses sustainability trends in energy credits, especially in the era of Covid 19. The analysts acknowledge the demand collapse that is keeping crude oil, and accordingly alternatives fuels, at very low values. Their focus is on what lies ahead for energy credits.Read More


Change is in the Air, But Will It Stay?

Jul 7th, 2020 | Filed under: Newly Added, The A.I. Industry, Personalities in AI

By Debbie McLean, Managing Director of Global Relations at CAIA Association I’m one of five women in my family who attended an all-women’s college. Mount Holyoke was established 183 years ago to be the “Harvard equivalent” for women who were not allowed to attend the prestigious university perched on theRead More