...Gregory Connor and Mason Woo An Introduction to Hedge Funds Introductory Guide 1 Introduction International Asset Management (‘IAM’) is the proud sponsor of the IAM Hedge Fund Research Programme of the Financial Markets Group. Within this programme the LSE team undertakes independent research into aspects of the hedge fund industry. It is hoped that the results of this research will give greater understanding about this growing area of financial innovation. This research paper gives a broad introduction to the hedge fund industry, the historical background to the evolution of hedge funds, the fund of funds industry and provides an explanation of some of the terminology used within this area. As an overview of the industry the document does not attempt to address the use of hedge funds within the broader context of portfolio management such as organisational risk or other areas of concern for the investor. This is a nontechnical paper and as such is intended for students or practitioners seeking a general introduction and reference tool. It is not a survey of the research literature and citations are kept to a minimum. If you wish to keep updated on the IAM Hedge Fund Research Programme please let us know. If you have any questions please contact IAM at our London office or visit our website: 34 Sackville Street London W1S 3EF Tel. +44 (0)20 7734 8488 www.iam.uk.com For information about the research activities of the Financial Markets Group see the following page...
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...made on team A by backing team B at some point in the contest to ‘hedge’ your position. In finance there are numerous strategies used, a number of which I will explain later. The goal of a hedge fund is to generate positive returns no matter what the market does. A hedge fund can be described as an “actively managed private investment fund that seeks positive attractive returns”. Frush, Scott. (2006). Understanding Hedge Funds. Ann Logue differentiates them from other investment tools, “They differ from so called ‘real money’ traditional investment accounts such as mutual funds, pensions, endowments and so forth, because they have more freedom to pursue different investment strategies”. Logue, Ann C. (2006). Hedge Funds For Dummies. This comment is valid as for the most part they are not as heavily regulated as other investment institutions. In his book Investing in Hedge Funds (2005), Joseph Nicholas asserts that in days gone by the term hedge fund is actually used to describe both a structure that is “a co-mingled investment fund” and a strategy. Today, however he argues that it is best describes the context of the structure of the investment and the strategy used to help the strategy come to fruition. Similar to most private equity funds hedge funds are set up as limited liability companies or partnerships to protect investors from being exposed to losses more than their initial investment. Typically fund fees are structured in two parts, a management fee of 1-2% of the...
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...figures about the region’s growing success in the hedge fund industry and its potential for further growth STeVe FlYNN is the chief executive of the global business companies within the cim group. He has experience in offshore, financial services and corporate administration in the uK, bermuda, india, luxembourg and south africa. steve has worked with a number of financial services companies, the most recent being commercial union, maitland Fund services, Fidelity investments, credit suisse life and Pensions and ernst & Young bermuda. ASHWIN JUGBANDHAN is a Fellow of the association of chartered certified accountants, member of the uK securities & investment institute and general manager at imm. He has experience in global fund administration in mauritius, guernsey and channel islands. He advises multinational corporations and fund managers on regulatory matters, structuring, establishment and funds. He holds a number of directorships, including listed entities. M ” auritius is famed for its idyllic beauty as a holiday destination, but in financial circles, it is also becoming wellknown as one of the most trusted and competent financial services centres globally. In 2008 the financial services sector amounted to 12% of Mauritian GDP, only slightly behind hotels and tourism. Mauritius opened up its financial services industry in the early 1990s and has become the tried and trusted route for any kind of investment, including fund investment, into India. Already, 44% of all foreign...
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...MBA Admissions Essay Powerful Tips for Improving Your Odds of Gaining Admission to the MBA Program of Your Choice Admissions essays are easily the most challenging part of the MBA application process, and it’s no wonder. Most people don’t like to write, and even those of us who do enjoy writing can come up blank when called upon to write about ourselves, especially when so much is at stake. The fact remains: If you want to go to business school, you have to be able to generate one or two thousand carefully chosen words that sum up your background and experience, your career goals, your reasons for seeking the MBA, and why you’ve chosen the program to which you’re applying. Step one: Relax. Writing admissions essays is stressful—it’s supposed to be stressful— but that doesn’t mean it’s impossible. Everyone who has ever applied to business school has written admissions essays, and so can you. All you have to do is submit essays that are a little bit better than most of the others, and if you follow the advice we’ll cover in the following pages, it will be a lot less painful. How to Write a Successful Most MBA essays are mediocre The good news is that most MBA admissions essays are mediocre at best. If you can at least come up with a marginally compelling narrative, and if you can spell and punctuate everything correctly—or know someone who can—you’ll automatically have an advantage over much of the competition. This guide is designed to help you get started (the hardest...
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...Industry: The heath care sector is dominated by few big firms that are highly profitable and with stable free cash flow and returns on capital. Despite of the sectors high profitability is hard for new companies to come into the sector, which is due to high barriers of entry. One of the barriers is the long timeframe of the drug development (see appendix) and the amount of money that is necessary to be spent in order to get through with the project. As mentioned in our case, the cardio surgeons are the “cowboys” that fast adopts new technologies and cardiac devices, which are due to lower switching costs, as a result the product cycle can be very short and the firms must spent a lot of time and money in R&D in order to keep up with the development. Company’s overview: Conor Medsystems, LLC develops controlled vascular drug delivery technologies. The company focuses on the development of unique drug-eluting stents for the treatment of restenosis. Its products include stents specifically designed for multi-drug delivery. The main competitive advantage of their stents is that their device includes hundreds of small reversion drilled into the stent, and each of this tiny holes could be packed with different drugs. Also they create new cobalt chromium stent that would be thinner and stronger. So approximately for further 2-3 years Conor won’t have the rivals in this area of business. The question that faces the management on this stage is what appropriate scheme and amount of...
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...Richard McEnally, and David Ravenscraft. 1999. “The Performance of Hedge Funds: Risk, Return, and Incentives.” Journal of Finance. Vol. 54, No. 3: 833–874. ACLI Survey. 2003. The American Council of Life Insurers. Agarwal, Vikas and Narayan Naik. 2000. “Performance Evaluation of Hedge Funds with OptionBased and Buy-and-Hold Strategies.” Working Paper, London Business School. Ali, Paul Usman and Martin Gold. 2002. “An Appraisal of Socially Responsible Investments and Implications for Trustees and Other Investment Fiduciaries.” Working Paper, University of Melbourne. Almgren, Robert and Neil Chriss. 2000/2001. “Optimal Execution of Portfolio Transactions.” Journal of Risk. Vol. 3: 5–39. Altman, Edward I. 1968. “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy.” Journal of Finance. Vol. 23: 589–699. Altman, Edward I. and Vellore M. Kishore. 1996. “Almost Everything You Wanted to Know about Recoveries on Defaulted Bonds.” Financial Analysts Journal. Vol. 52, No. 6: 57−63. Altman, Edward I., R. Haldeman, and P. Narayanan. 1977. “Zeta Analysis: A New Model to Identify Bankruptcy Risk of Corporations.” Journal of Banking and Finance. Vol. 1: 29−54. Ambachtsheer, Keith, Ronald Capelle, and Tom Scheibelhut. 1998. “Improving Pension Fund Performance.” Financial Analysts Journal. Vol. 54, No. 6: 15–21. Ambachtsheer, Keith. 1986. Pension Funds and the Bottom Line: Managing the Corporate Pension Fund as a Financial Business. Homewood, IL: Dow Jones-Irwin. American...
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...institutions for fund management. The given paper is a descriptive analysis of the role of financial institutions in financial markets. In addition to this, the paper also talks about how these institutions interact with each other. Financial market is a system that provides a common platform to people for the purpose of buying and selling financial securities, commodities, and other fungible items. In addition to that, the financial market also helps in risk mitigation and international trade. An efficient financial market facilitates these transactions at low cost and effective hypothesis (Amadeo, 2010). Financial markets can be grouped as: * Capital market, Stock and Bond markets. * Commodity markets. * Money markets, for short and long term financing. * Derivative markets, provides tool for managing financial risks. * Insurance markets; and * Foreign exchange markets. On the other side of things, financial institutions in simple words can be defined as an institution that provides various financial services to its customers. These institutions act as financial intermediaries between individual customers, organizations, and government (InvestorWords.com, 2010). Financial intuitions can be grouped under three heads, namely: 1. Depositories, these institutions accepts, store, and manage deposits and loans. Example, banks, credit unions, companies giving mortgage loans, and credit trusts and unions. 2. Insurance and pension funds providers, these...
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...StockTrak Project Summary 1. I chose to passively manage my portfolio for a number of reasons. The first reason was in order to minimize trading costs and therefore increase overall real return of my portfolio. The second reason was that finding mispriced securities is a hard task to undertake, and therefore would increase the volatility of your returns. Since I don’t have previous trading experience, I would be taking a risk by trying to outperform the market. For that reason, I decided to passively hold the indexed portfolio. My third reason for choosing a passive management style was that the current state of the market is very volatile. Even experts from top banks have had a hard time correctly predicting the future outlook on equities. Another big reason I chose to passively manage my portfolio is that capital gains taxes are drastically lowered using this strategy. By holding securities for long periods of times, you decrease the capital gains taxes owed when you sell the securities. For active managers, high capital gains tax on sold securities is a big cost to consider. I wanted to avoid this issue and factored it into my decision to be a passive portfolio manager. 2. My final tracking error was .74%. This tracking error shows a fairly close relationship between the returns of my portfolio and the S&P 500 index. This tracking error was consistent with the initial optimization objective of closely modeling the returns of the S&P 500 as indicated by the...
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...granddaddy of worker sites.” – US News and World Report “A killer app.” – New York Times One of Forbes’ 33 “Favorite Sites” – Forbes “To get the unvarnished scoop, check out Vault.” – Smart Money Magazine “Vault has a wealth of information about major employers and jobsearching strategies as well as comments from workers about their experiences at specific companies.” – The Washington Post “A key reference for those who want to know what it takes to get hired by a law firm and what to expect once they get there.” – New York Law Journal “Vault [provides] the skinny on working conditions at all kinds of companies from current and former employees.” – USA Today HEDG FUND CARE VAULT CAREER GUIDE TO HEDGE FUNDS © 2007 Vault, Inc. HEDG FUND VAULT CAREER GUIDE TO HEDGE FUNDS ADITI A. DAVARE, HOLLY GOODRICH, MICHAEL MARTINEZ AND THE STAFF OF VAULT © 2007 Vault, Inc. Copyright © 2007 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the most trusted name in career informationTM” are trademarks of Vault Inc. For...
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...Hedge Fund Creation and Management Project Technical Strategy on Momentum Stocks Introduction to Fund Philosophy Carhart’s Four Factor Model Our fund’s main strategy was based on exploiting value from momentum that can be uncovered in securities with positive momentum. We used the Cahart four factor model, based on the fama french model that assumes efficient market theories, to find out if an underlying securities carries the power of momentum. In the fama-french model, the return of a security is explained by 3 factors: market returns, sizes of firm and book values of firm : However, the model was unable to predict some market anomalies and a student of Fama’s found that adding a momentum factor helped to better predict these anomalies. While a momentum factor helps to explain the returns observed in the market, it also implies that markets are not efficient in any form. If that’s the case, then it should be possible to generate returns with a technical trading strategy on stocks that are significantly correlated with the momentum factor. Strategy Implementation Stock Screening We chose the firms within the Dow Jones Industrial 30 as our stock universe and traded all securities that are significantly correlated with the Fama-French Carhart Momentum Factor. The Dow 30 consists of high quality, highly liquid large cap stocks. Their liquidity characteristic increases the likelihood that “herding” will be observed and reduces the impact of entering...
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...constituting them into a different, and more widely preferable, type of asset–which becomes their liability. B) Exchange financial assets on behalf of customers but not for their own accounts. C) Manage the portfolios of other market participants. D) Assist in the creation of financial assets for their customers, and then sell those financial assets to other market participants. Answer: B Comment: Financial enterprises exchange financial assets both on behalf of customers and for their own accounts. Diff: 2 Topic: 2.1 Financial Institutions Objective: 2.1 the business of financial institutions 2) Financial intermediaries include ________ that acquire the bulk of their funds by offering their liabilities to the public mostly in the form of deposits; insurance companies, pension funds, and finance companies. A) depository institutions B) utilities C) initial public offerings D) preferred equity instrument. Answer: A Diff: 1 Topic: 2.1 Financial Institutions Objective: 2.1 the business of financial institutions 3) Some nonfinancial enterprises have subsidiaries that provide financial services. These financial institutions are called ________. A) free finance companies. B) captive finance companies. C) captive investment companies. D) captive finance shares. Answer: B Comment: Some nonfinancial enterprises have subsidiaries that provide financial services. For example, many large manufacturing...
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...IPO pricing and allocation: a survey of the views of institutional investors * Tim Jenkinson Said Business School, Oxford University and CEPR Howard Jones Said Business School, Oxford University Abstract Despite the central importance of investors to all IPO theories, relatively little is known about their role in practice. In this paper we survey institutional investors about how they assess IPOs, what information they provide to the investment banking syndicate, and the factors they believe influence allocations. Although the theoretical IPO literature has tended to focus on information revelation, the survey raises doubts as to the extent of incremental information production and whether bookrunners are, in practice, able to infer investors’ valuations from their bids. We find that investor characteristics, in particular broking relationships with the bookrunner, are perceived to be the most important factors influencing allocations, which supports the view that IPO allocations are part of implicit quid pro quo deals with investment banks. JEL classification: G23, G24 Keywords : IPO, institutional investors, survey * Corresponding author: Tim Jenkinson, Saïd Business School, 1 Park End Street, Oxford OX1 1HP, UK. e: tim.jenkinson@sbs.ox.ac.uk; t: +44 1865 288916; f: +44 1865 288805. We are very grateful to the Investment Management Association, in particular Tina Johnson, Jane Lowe, and Gordon Midgely, and the Alternative Investment Management Association, in...
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...The Growth of Modern Finance* Robin Greenwood Harvard Business School and NBER David Scharfstein Harvard Business School and NBER July 2012 Abstract The U.S. financial services industry grew from 4.9% of GDP in 1980 to 7.9% of GDP in 2007. A sizeable portion of the growth can be explained by rising asset management fees, which in turn were driven by increases in the valuation of tradable assets, particularly equity. Another important factor was growth in fees associated with an expansion in household credit, particularly fees associated with residential mortgages. This expansion was itself fueled by the development of non-bank credit intermediation (or “shadow banking”). We offer a preliminary assessment of whether the growth of active asset management, household credit, and shadow banking – the main areas of growth in the financial sector – has been socially beneficial. * We thank Toomas Laarits for excellent research assistance. We are grateful to Lewis Alexander, John Campbell, Darrell Duffie, Sam Hanson, Anil Kashyap, Morgan Ricks, Andrei Shleifer, Jeremy Stein, Adi Sunderam, Paul Tucker, Bob Turley, Luigi Zingales, and especially David Autor and Tim Taylor for very helpful suggestions. We also thank Erin Ludlow, James Green, Rodger Smith, Karen Lanzetta, Justyna Podziemka, Covie Edwards-Pitt for their help and advice on financial services data, and the Securities Industry and Financial Markets Association (SIFMA) and Greenwich Associates for providing...
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...| Alternative Investment Project | | | | | | | | Content Page: Content | Page | Cover Page | 1 | Content Page | 2 | Executive Summary | 3 | Introduction | 3 | Content of Project | 4 | Conclusion | 9 | Recommendation | 9 | Appendix | 10 | Assignments of work | 19 | Executive Summary: The purpose of the report is to do an in-depth investigation, study and analysis on alternative investments. From the various alternative investments, our team of analyst chose commodities, variable annuities and hedge funds as our subject of interest for the study. Each financial product has its own aims as to cater to the different investment goals to meet the needs of investors. Thus, just by looking at the basis on expensiveness and tax-efficiency, and then from selecting the better one is unwise. We have to look at the overall picture and considering other indispensable factors like risks, liquidity, asset allocation which are equally important. Therefore, our basis of evaluation comprises of various important factors so as to make a robust analysis. Firstly, commodities are a highly demanded investment which is traded using options and futures contract.. Moreover, they are also an element of diversification that investors can lower their vulnerability to market volatility. Despite its high volatility in its prices, it managed to gain a higher return as compared to stocks and bonds. As commodities have a low correlation with bonds...
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...management and support from our numerous clients have led our Group in diversifying its business activities. In the second phase, the Group went into manufacturing handmade cigarettes popularly known as bidis. This sector gave a real boost to the revenue earning of the Group as well as making a substantial contribution to government exchequer. With the passage of time, the Group undertook new ventures and presently there are 15 units of industries under its umbrella like cigarettes, handmade cigarettes, printing & packaging, textiles, hand board, pharmaceutical, leather processing and real-estate business are in operation, catering jobs for more that 32,000 people in various categories. The Group has plans for setting up more projects. The projects are already in pipeline. Foreign investors have shown keen interest in joining with us for joint ventures. The matter is under our active consideration and will hopefully soon mature. This will also help the nation's economy growth and will create job opportunities to various professionals. Akij Group is also involved in socio-cultural activities. The Group has been operating a sizeable orphanage free of charge in district town. The Group has also acquired a modern mother & children hospital previously owned by Save the Children (UK). The hospital is being operated as a non-profitable concern by Ad-Din Welfare Trust. THEIR SECTOR Akij Jute Mills Ltd. Akij Match Factory Ltd. Akij Food & Beverage Ltd...
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