Absolute Returns: The Risk and Opportunities of Hedge Fund by Alexander M. Ineichen

By Alexander M. Ineichen

The area of making an investment floats on an enormous sea of phrases, such a lot of that are seen, simple-minded, and clichés, and all of these are risky to monetary healthiness. the tale during this publication bears no relation to all that stuff. Ineichen’s message is unique, robust, complete, and necessary to powerful monetary future health. The literary readability he blends together with his monetary knowledge is an extra blessing. –Peter L. Bernstein, President, Peter L. Bernstein, Inc., writer of opposed to the Gods and the ability of Gold

''No you can actually have enough money to hazard cash in hedge money with out examining this accomplished consultant. the main points are illuminating, presentation desirable, research very good and classes profound. a superb contribution to the hedge fund literature.'' –Prof. Narayan Y. Naik, Director, Centre for Hedge Fund examine and schooling, London enterprise university

''A strong figuring out of the operating of the hedge fund marketplace and hedge fund concepts is critical for each lively investor. Ineichen’s publication does a superb task tying jointly old, empirical, and theoretical research in a manner quite simply available to practitioners. A extra complete exam of the hedge fund industry and hedge fund options will be challenging to find.'' –Hans de Ruiter, ABP Investments, Senior Portfolio supervisor Quantitative fairness concepts

''Hedge money should not mainstream and this ebook isn't mainstream both. the writer demanding situations conventional funding paradigms and how traders take into consideration chance. a thrilling learn and a needs to for each specialist investor.'' –Dr. Burkhard Poschadel, leader govt Officer, GAM

''Written for the pro investor, Alexander Ineichen’s booklet presents a accomplished, in-depth research of different funding thoughts. Combining the most recent study along with his personal insights, Ineichen has produced the definitive research of hedge money and cash of hedge funds.'' –Richard Elden, Chairman, Grosvenor Capital administration, L.P.

''Alexander Ineichen’s in-depth study findings and analytical perception are introduced jointly during this publication that is chock-full of precious statistics on hedge fund recommendations. Definitions, examples, return/risk parameters, and key threat components are supplied for every method. This entire e-book is a need for each hedge fund investor.'' –Lois Peltz, President, Infovest21

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The only exception is investors that neither invest nor withdraw assets. These investors would have earned the same IRR by investing with either manager. An investor who was a saver, contributing $100 per year, would earn $120, $264, and $328 with Manager A by the end of years one to three, respectively, but $90, $228, and $394 with Manager B. The increase in wealth produced by each fund ($328 versus $394) is dramatically different even though the timeweighted return is the same. This effect is more pronounced the greater the degree of variation in returns.

By the end of 2001, more than 50 percent of the assets under management were somehow related to a variant of the Jones model, long/short equity. However, even the subgroup of long/short equity became heterogeneous. 4 compares some alternative investment strategies with the traditional long-only strategy with respect to the variation in net market exposure. The horizontal lines show rough approximations of the ranges in which the different managers are expected to operate. It will become clear in later chapters that the superiority of the long/short approach is derived from widening the set of opportunities (and the magnitude of opportunities) from which the manager can extract value.

The 1990s saw another interesting phenomenon. A number of the established money managers stopped accepting new money to manage. Some even returned money to their investors. Limiting assets in many investment styles is one of the most basic tenets of hedge fund investing if the performance expectations are going to continue to be met. This reflects the fact that managers make much more money from performance fees and investment income than they do from management fees. Due to increasing investor demand in the 1990s, many funds established higher minimum investment levels ($50 million in some cases) and set long lock-up periods (three to five years).

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