View
218
Download
0
Category
Tags:
Preview:
Citation preview
2
Traditional Asset Classes
US Stocks $11.9T EAFE Stocks $14.4T US Fixed Income $13.9T Intl Fixed Income $17.2T US High Yield $.8T
4
Alternatives
Real Estate $11.5T/$90T Commodities >$4T Timberland $.06T Hedge funds $1.6T* PE $2T VC .25T*Versus 22.4B worldwide in mutual funds
11
Timber
Traditionally institutional ETFs CUT and WOOD
Asset Class Correlation Bonds 0.03 International Equity 0.76 Domestic Equity 0.69 REITs 0.55 Commodities 0.20 3-Month T-Bill 0.08 Source ETFDB.com
17
Hedge Funds
Not mutual funds• Not subject to SEC regulation (so far)
• Organized as limited partnership• Small number of sophisticated investors
• Common feature is use of leverage
High returns in 1990s• Lack of correlation has not held up recently
18
Hedge Funds Different From Mutual Funds
Investment by manager Limited to high net worth investors Concentrated bets Fees – large Little regulatory oversight Lack of liquidity Lack of transparency Asset allocation is slippery High attrition Can hold riskier assets Significant leverage
19
Estimated Growth of Assets / Net Asset Flow Hedge Fund Industry 1990 – Q1 2007
$38,910 $58,370$95,720
$185,750
$256,720
$456,430$490,580
$539,060
$57,407$91,431
$4,406$55,340
$23,336$46,545
$99,436$126,474
$60,222
$374,770$367,560
$625,554
$820,009
$1,105,385
$972,608
$167,360$167,790
$1,464,526
$1,568,400
$73,585
$8,463
$70,635
$14,698
($1,141)
$36,918$27,861 $46,907
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
$1,600,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Q12007
Ass
ets
(In
$M
M)
Estimated Assets Net Asset Flow
20
Some Hedge Fund Strategies
Mutual funds are long-only Long/short equity
• Statistical arbitrage
• Market neutral
Event Driven Global Macro Arbitrage
• Convertibles arbitrage
• Relative value
22
Hedge Funds
Near collapse of Long-Term Capital Management• $3.6 billion bailout
• Precipitated SEC scrutiny of hedge funds
23
Regulation of Hedge Funds
Generally unregulated• Exemption for less than 100 investors
• Exemption if accredited
Scandals such as Canary Capital Partners
• Illegal trading with mutual funds
• Amaranth Advisors, 2006
• SEC scrutiny
24
Offshore Hedge Funds
Major centers include Cayman Islands, Bermuda, Dublin, Luxembourg.
Rules • Generally not burdensome
• Anonymity
• Tax advantages
25
The following 5 slides* are from:
AIMA’s Roadmap To Hedge Fundspublished November, 2008
Alternative Investment Management Association
* Also slide # 29
Recommended