Alternatives Flashcards
What 3 strategies are under equity strategies?
Long/Short equity;
Dedicated short selling and short biased;
Equity market neutral
What is equity market neutral strategy earn? How is its return compares to the other two?
earn alpha, beta=0
return is modest among the 3
Does equity market neutral strategy use leverage? low or high?
Highest leverage amount the three.
What strategies are under event-driven strategies?
Merger strategies and Distressed securities
What does merger arbitrage strategies long and short?
Merger arbitrage long target stock and short acquirer stock
Does merger arbitrage use leverage? low or high?
High
What are 2 strategies under relative value strategies?
Fixed income strategies and convertible bond arbitrage
What does convertible bond arbitrage strategies long and short?
Convertible bond arbitrage strategies long convertible bond and short stock
Does convertible bond arbitrage strategies use leverage? low or high
High
What standard deviation is required for convertible bond arbitrage strategies?
Stable, moderate
What are the strategies under opportunistic strategies?
Global macro & managed futures
What are the strategies under specialist strategies?
Volatility trading & reinsurance / life settlements
What are the 3 hopes of hedge fund when they have a life settlement?
- ongoing premium is low
- cash surrender value is low
- insured person die as early as possible
What are the strategies under multi-manager strategies?
Fund of fund and multi-strategy hedge fund
What are 3 common good characteristics of multi-strategy hedge fund?
- improved fee structures (lower netting fee risk)
- faster tactical asset allocation
- more transparency
What are 2 bad characteristics of multi-strategy hedge fund?
- higher manager-specific operational risk
2. less liquidity or limitation trying to redeem back
which strategy use lower leverage? Fund of fund or multi-strategy hedge fund? Which one is more diverse?
Fund of fund uses lower leverage and more diverse
