Alternative Investments Flashcards
What AI’s, their characteristics and what do they offer?
What are the categories of AI’s
What are the pros/cons of fund investing, co-investing and direct investing?
Describe the difference in due-diligence depending on the type of investment and the difference between LP and GP
Describe compensation methods for fund?
Describe the catch up clause, high water mark
Describe the difference between EU and US waterfall payment structure
EU deal is assessed as whole fund and LP’s get paid back when the wholefund makes 200, whereas on the deal by deal they only get money back after clawbacks
Charactheristics of hedge funds
Explain funds of funds HF’s and the usual fees
Describe the equity hedge strategy and the different types
d) Short-biased: short overvalued equity with no or
some long exposure ( index ETFs)
e) Sector-Specific: manager expertise in a particular sector
Explain the event driven HF strategy and the types
Explain the relative value HF strategy
Explain the macro and CTA strategy
What is private equity and what are LBO’s
Describe the stages in funding for VC
Venture Capital - investments in private companies with high growth potential
- typically start-ups or young companies
- active involvement in portfolio companies
What is growth equity and what is a trade sale exit
Describe the exit strategies of IPO, recapitalisation, secondary sale and write off/liquidiation
What are the types of private debt
Explain the risk/return profile of PE and Debt types
Explain how different types of private debt/equity differ by growth or value orientation
What are the different types of natural resources
Characteristics of commodities
Characteristics of timber/farmland
What are the risk/return profile for commodities and timber/farmland
What are the diversification benefits and investment instruments for commodities and timber/farmland
Explain the charactheristics of real estate and the basic forms of RE investment
Explain direct and indirect RE investing and mortgages?
What are the RE private investment styles
What are REITS and what do they offer
What are the characteristics of residential property, commercial real estate and REIT’s
What are the risk/return characteristics of RE indexes, private RE investment and repeat sales indexes.
Risks ➞ interest rate risk
economic conditions ( leasing, rates)
operating risk ( costs)
financial risk ( leverage, securing debt)
What are the diversification benefits of RE
Diversification/ ~ 50% of returns (private core, listed real estate)
derived from income
~ moderate correlations with equities and bonds
question remains ➞ does public RE overstate volatility
or does private RE understate volatility
Explain infrastructure investments and the investment characteristics
Describe the types of infrastructure investments
Greenfield versus brownfield infra investment
Forms of infra investment and its diversification benefits
Risk/return profile of high, medium and low risk infra
Issues in performance appraisal: Sharpe, treynor , sortino
what is the calmar, MAR ratios and J-curve
Describe the multiple method, quartile ranking , RE cap rate and capital loss ratio
Performance measures for hedge funds
Explain redemptions in hedge funds, lock-up and notice periods
Explain the different types of custom fee arrangements for hedge funds
