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Most people view environmental change as either a social issue or a marketing opportunity. With corporations and investors focused on the next quarter, not the long term, it's often difficult to see the impact of environmental issues on the world of investing. But as today's guest contributor Dr. Angelo Calvello argues, society's response to environmental issues has pushed forward their investing implications to the present day (think: carbon credits, clean-tech investing, and shifting pension mandates for starters). He writes ...
When you think about it, the idea of an investment benchmark is somewhat philosophical. Although many hedge fund managers profess to deliver uncorrelated "absolute" returns - not relative returns - a large portion of them compare their results to equity markets. Why? Not necessarily because they manage to that bogey, but because hedge fund allocations are often made by diverting capital from equity allocations. In other words, equities are the most likely alternative. Today's guest contributor says that the ...
There is no clear-eyed view on the culprits behind the Great Liquidity Meltdown of 2008-2009. But there is a gimlet-eyed view: everybody. That's a fancy euphemism for “systemic.” And so the regulatory Leviathan grinds forward, with tighter strictures for the banks that are already regulated, and now to draw the so-called shadow banking system into its grips.
Ah yes, the shadow banking system: investment banks now converted into regulated bank holding companies … and hedge funds and leveraged buyout firms that may have had a passing acquaintance with them.
In a ...
Last December, after a particularly tough year during which liquidity was only beginning to drip back into markets, the Harvard Endowment was faced with a quandary that affected hundreds of other endowments across the United States - sell illiquid investments like private equity at a discount or borrow money to shore up its liquidity position. Harvard eventually chose to borrow - issuing $1.5 billion of bonds. Long hailed as the ideal investment for the "long term" investor, illiquid alternative investments are now blamed for precipitating the worst year on record ...
"Ain't nothing like the real thing, baby
Ain't nothing like the real thing"
So sang Marvin Gaye and Tammi Terrell in their 1968 hit song about how nothing can really replace reality.
The simple yet effective lyrics can also apply to academia, which is rife with abstract scenarios, not real-life situations. Nowhere is this truer than in finance, where dreaming up hypothetical disaster scenarios is part of the job.
Thankfully for us, few of these scenarios ever come to pass. But still many academics secretly dream of encountering a scenario so bizarre that it tests their ...
Advocates for hedge funds often point to performance-based fees as evidence of greater alignment between manager and investor. "We make money when you make money", they say. However, critics point to the asymmetry of these fees and quip that the hedge fund mantra should be more like: "We're not happy until you're not happy."
In any case, mutual funds, with their asset-based fees, lack such explicit alignment of interests. But advocates for mutual funds will often point out that the link between the interests of investors (returns) and those of the ...
Springtime for Hitler is the satirical opening number to Mel Brooks' classic movie The Producers, where the juxtaposition of dancing stormtroopers both horrifies and entertains at the same time. Springtime for mergers in acquisitions in the alternatives space could potentially be a spiritual sequel: on the one hand almost satirical to think about, given the financial battle the world has just gone through and at the same time the optimism that asset managers are once again ...
The battle for the hearts and minds of investors has raged for over a decade now. On one side, hedge funds have argued that a boutique, alpha-centric approach is best while on the other side, mutual funds have used their considerable marketing and distribution skills to make the case for the tried and true (read: less idiosyncratic) approach of long-only investing. The central front in the battle is often the alignment between manager and investor. ...
By: Steve Deutsch, Morningstar & AllAboutAlpha.com Editorial Board Financial Times columnist Tony Jackson wrote earlier this week that General Motors is essentially a giant hedge fund attached to a car company. Why? Because, he reports, 65% of the GM pension fund "is spread across real estate, equities, hedge funds, private equity and so forth." In general, this made me wonder how defined benefit pension plans, those long-term, patient sources of capital, are now using alternative investments ...
From an investing standpoint, Asia and more specifically China haven’t exactly been the post-crash darlings many had expected. Chinese stocks in particular have taken a beating, while indices in other Asian tigers have had their tails handed to them. All the more reason why this recent survey from AsianInvestor and Clifford Chance noting that buy-side investors were keen on the region caught our eye on a lazy August Friday. Not only are the 249 buy-side participants surveyed ...
