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33 Cards in this Set
- Front
- Back
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There are two main types of FoHF funds of Hedge Funds. What are they? |
Single Strategy multi manager, Multi strategy multi manager, |
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What are 3 major hedge fund strategies? |
RED Relatives Value Strategies Event Driven Strategies Directional strategies |
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What is the most popular type of hedge funds strategy? |
Long-short equity |
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Which hedge funds is highly publicized but constitutes a small percentage of hedge funds ? |
Global Macro |
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What is relative value Strategies? |
Attempts to profit by exploiting inefficiencies or arbitrage opportunities in stocks, bonds, derivaties. Low underlying market direction
Exploit means extract |
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What is a managed futures fund? |
Invests in financial and commodity future and currency .
Fund managers are called commodity trading advisers. CTA |
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What can real estate and REIT be considered as a substitute? |
bonds for real estate And High yield bond or equities for REIT |
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What is the most popular method of commodity investment ? |
Managed Future Fund.
Which is a pooled fund vehicle |
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An investment is generally considered alternative if it meets the following criteria: |
1.Has different performance characteristics from traditional assets That is Alternative Investments do not conform to the normal or bell shaped return distribution 2. rarely traded in public markets 3. Illiquid 4. uncommon in portfolios 5. limited history 6. unconventional skills from manager |
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What's the definition of Hedge funds? |
Are lightly regulated pools of capital whose managers have great flexibility in their investment strategies. These strategies are referred to as alternative investment strategies. 12. 4 |
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What do we mean by high water mark? |
A stipulation that the fund's value must be greater than its previous greatest value for the manager to receive a performance fee 12. 24 |
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What is an example of an arbitrage opportunity existence when applying convertible arbitrage strategy? |
When a convertible bond's trading price moves away from its theoretical value
12. 6 |
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What is Equity Market Neutral strategy? |
Exploits equity market inefficiencies and opportunities by creating simultaneously long and short matched equity portfolios of approximately the same size. The goal of equity market neutral investing is to generate returns that do not depend on the stock market's direction. 12. 5 |
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How does Convertible Arbitrage work? |
A convertible arbitrage strategy identifies and exploits the mispricing between convertible securities, such as convertible bonds or preferred shares, and the underlying stock.
This strategy involves buying undervalued convertible securities and hedging some or all of the underlying equity risk by selling short issuer's common shares |
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What kind of issuer's securities are sold short when using Convertible Arbitrage strategy? Preferred shares, Convertible bonds, Convertible shares, Common shares |
Common shares 12.6 |
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What aspect of manager is more important for hedge funds than for almost any other managed product? |
Manager's Skills 12. 4 |
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In the case of convertible arbitrage, when does convertible bond prices behave like equity prices? |
When common shares rise well above the conversion price, which is the stock price at which a bond value can be converted into an equivalent number of common shares |
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In the case of convertible arbitrage strategy, in the declining stock market with rising interest rate, what would happen to a long convertible bond and a short stock? |
Realize a gain on the short stock position that exceeds the loss on the bond
12.6 |
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Fixed Income arbitrage, What are the highlights of it ? |
1. Attempts to profit from price anomalies between related interest rate securities and derivatives 2. includes government and non government bonds, mortgage backed securities, options, swaps, forward rate agreements, 3. High leverage is used to generate returns well beyond transaction costs 4. Leverage can range from 10 to 30 times of capital used
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Out of all hedge funds strategies (R.E.D) Which one uses little or no leverage? |
High yield bonds |
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What's the definition of Dedicated Short Bias ? |
To be classified as short bias, the fund's net position must always be short. The fund may have long positions, but on a net basis, it must constantly be short |
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Most managers of managed futures funds apply a systematic approach to trading, using blank space, and blank space, analysis of price and volume information to determine investment decisions |
Technical and Statistical |
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What's the 2 reasons a manager use high yield bonds strategy out of hedge funds strategies? |
The manager believes the company may either: get a credit upgrade, or is a takeover target |
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In the case of convertible arbitrage, when does a convertible bond behave more like a regular bond? |
When the common shares decline well below the conversion price |
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Out of all hedge fund strategies, which ones apply simultaneous strategies? |
Equity market neutral, merger or risk arbitrage, Long / short equity, |
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Fund of hedge funds disadvantages? |
Addi, cos! No guarantee if dive, Dive addi live,
Additional cost, 1% management fee , 10% incentive fee, plus fund expenses, No guarantee of positive returns , Low or no strategy diversification, Insufficient or excessive diversification, Additional leverage
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Distrssed Securities, What is the full paragraph? |
Event driven strategy,
A distressed securities strategy invests in the equity or debt securities of companies that are in financial difficulty and face bankruptcy or reorganization. Distressed securities sell at deep discounts, reflecting their issuer's weak credit quality.
Institutional investors are not permitted to own securities rated less than investment grade.Therefore, downgrading the credit rating of an issuer or security to below the permissible minimum can precipitate a wave of forced selling that depresses the securities value below fair market value.
Hedge fund managers attempt to profit from the market's lack of understanding of the true value of discounted securities and the inability of investors to hold these securities
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Many successful hedge funds have reached their capacity limitation and either do not accept new money or accept money only from existing investors. What's the solution to that and name the advantage Which solves this issue? |
Fund of hedgefunds, FoHF. Access to hedge funds Fund of hedge fund managers, will know how to contact a hedge fund manager and update information on a particular fund and are able to reserve capacity with a fund. |
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Mezzanine capital. What are its highlights? |
Financed by floating high yield unsecured preferred equity or subordinated loans, Above common stocks in seniority, Costly way to raise capital, Risk of default : highest in debt spectrum but higher returns |
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What's the definition of performance attribution ? |
Is the process whereby a fund's periodic performance results are analyzed to determine various "sources" of returns |
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What are the benefits of alternative investments? |
Drr. Peac AAA, Diversification, Profit in any environment, Reduced volatility, Enhanced returns, Access to investment manager and strategies, Capital preservation, Access to global markets, Align with investors' interests through performance fees Align with investor's interest with those of investment managers (has their personal wealth in funds they manage) |
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Funds of hedge funds advantages? |
Dr. PAAM, Due diligence, Reduced volatility, Professional management, Access to hedge funds, Ability to diversify with smaller investment, Manager and business risk control, |
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According to Fidelity Investments, How many crypto currency funds are there available to investors? |
300 |
