Alternative Investments in Portfolio Management

December 6, 2012 May 15, 2012

Registration Fee: US$995.00 Register Location Instructor

Many classes sell out; we suggest registering at least one week in advance to ensure availability.

Intermediate Level, 7 CPE Credits
Instructor: David Oakes
Hours: 9:00 am - 5:00 pm; Registration/Breakfast begins at 8:30 am

Going into the summer months, yields in the U.S. remain stubbornly low and seem set to remain at these levels for some time. Investment managers are searching for yield and are returning to alternative investment as risk comes back in vogue. Commodities have been raging for a variety of reasons but have shown how volatile they can be. Private equity flows are bouncing back as financing returns to the market, and hedge fund assets under management are also increasing; both businesses, however, have been significantly transformed by the credit crisis.

In this interactive course, we examine how alternative investments fit into an overall asset allocation strategy and identify risks that are specific to alternative investments. Attending the course will help you develop a deeper understanding of what drives pricing and risk in alternative investments and make you better equipped to judge how and under what circumstances alternative investments might improve the risk-adjusted performance of your portfolio.

Session 1: Introduction

In this session, we ask what role investment in alternative assets should play in asset allocation. By the end of the session, you will be able to:

Outline the main types of alternative investment, including commodities, private equity and hedge funds
Compare and contrast the risk and return characteristics of alternative assets with those of traditional assets classes such as equity and debt

Explain why investors might seek exposure to commodities, private equity, hedge funds and other alternative assets through broader asset allocation

Session 2: Commodities

In this session, we develop investment and risk management strategies for commodity markets and identify factors that affect pricing and risk in those markets. By the end of the session, you will be able to:

Compare and contrast methods of investing in commodities
Use swaps and other derivatives to express views about single commodities and commodity indices and examine the factors that contribute to profit or loss on such strategies
Describe the main features of the physical and financial markets for agricultural products, metals, crude oil, natural gas and electric power

Session 3: Private Equity

In this session, we discuss two important forms of private equity investment: venture capital and leveraged buyouts. By the end of the session, you will be able to:

Describe how venture capital funds and leveraged buyout firms operate
Identify key criteria that venture capital funds and leveraged buyout firms use in assessing potential investments
Explain the financial structure of leveraged buyouts and identify factors that contribute to the profitability of private equity strategies
Describe the risk characteristics of private equity investment

Session 4: Hedge Funds

In this session we look at the alternative investment strategies pursued by hedge funds and ask what contribution they can make to risk and return on our portfolios. By the end of the session, you will be able to:

Describe the structure and objectives of hedge funds and outline the development of the hedge fund market over time
Identify the sources of risk and return in various hedge fund strategies
Compare the risk characteristics of hedge funds with those of traditional asset classes and investment strategies
Explain the significance of financing and the use of collateral to hedge fund strategies and discuss how the relationship between hedge funds and prime brokers has been affected by market and regulatory responses to the credit crisis