Market Behavior and Portfolio Construction
Traditional Perspectives on Market Behavior and Portfolio Construction Much of modern portfolio theory is premised on the efficient market hypothesis (EMH). The …
level III
Decision Making
Decision Theory Decision theory is concerned with identifying values, probabilities, and other uncertainties relevant to a given decision and using …
Behavioral Finance vs Traditional Finance Overview
Traditional finance is grounded in neoclassical economics. Within traditional finance, individuals are assumed to be risk-averse, self-interested utility maximizers. Investors …
Asset Allocation Approaches
An approach to determining the desired allocation to the alternative asset classes is to make the initial asset allocation decision …
The Investment Opportunity Set
Traditional approaches to defining the investment opportunity set include classifying asset groups by liquidity or by how they perform over economic cycles. …
Role of Alternative Investments
Below is a framework for how the common alternative strategies are generally perceived to affect the risk/return profile of a …
Portfolio Contribution of Hedge Fund Strategies
When a 20% allocation to hedge funds is added to a traditional 60% stock/40% bond investment portfolio, the resulting allocation …
Analysis of Hedge Fund Strategies
Following a practice-based risk factor perspective, a conditional linear factor model can be used to uncover and analyze hedge fund …
Multi-manager Strategies
Three main approaches are used to combine individual hedge fund strategies into a portfolio: creating one’s own mix of managers by …
Specialist Strategies
Portfolio managers for specialist hedge fund strategies use their knowledge of a particular market to pursue niche investment opportunities. Volatility Trading Once …