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Visual Guide to Hedge Funds

Book Description

Vivid graphics make hedge funds, how they work and how to invest in them, accessible for investors and finance professionals

Despite the recent wave of scandals related to the hedge fund industry, interest in hedge funds as a relatively safe alternative investment remains high. Yet details about how the industry operates and the strategies employed by different types of hedge funds is hard to come by. With increasing calls from lawmakers and the media for industry reform, it is incumbent upon finance professionals and high-net-worth individuals to take a good look before leaping into hedge funds. That's where the Bloomberg Visual Guide to Hedge Funds comes in. It provides a graphically rich, comprehensive overview of the industry and its practitioners, zeroing in on how different types of hedge funds work.

  • Based on extensive interviews with hedge fund managers, analysts and other industry experts, the book provides a detailed look at the industry and how it works

  • Outlines investment strategies employed by both long and short hedge funds, as well as global macro strategies

  • Arms you with need-to-know tips, tools and techniques for success with all hedge fund investment strategies

  • Provides a highly visual presentation with an emphasis on graphics and professional applications

  • Real-life examples take you inside how hedge funds illustrating how they operate, who manages them and who invests in them

  • Table of Contents

    1. How to Use This Book
    2. Introduction
    3. Chapter 1: Hedge Fund Daily Operations
      1. Hedge Fund Manager
      2. Portfolio Managers
      3. Traders
      4. Risk Management
      5. Chief Financial Officer
      6. Controllers
      7. Settlements
      8. Margin and Collateral
      9. Legal
      10. Compliance
      11. Investor-Relations
      12. Conclusion
    4. Chapter 2: The Hedge Fund Life Cycle: From Startup to Titan
      1. Hedge Fund Startups ($1M to $10M)
      2. Emerging Hedge Fund Managers ($10M to $300M)
      3. Hedge Fund Shooting Stars ($300M to $1B)
      4. Hedge Fund Titans ($1B+)
      5. Conclusion
    5. Chapter 3: Hedge Fund Investors
      1. Who Invests in Hedge Funds?
      2. The Hedge Fund Investor Due-Diligence Process
      3. Hedge Fund Investor FAQs
    6. Chapter 4: Hedge Fund Capital Raising
      1. Daily Process
      2. Hedge Fund Warfare
      3. The 1 Percent Rule
      4. Hedge Fund Investor Avatar Focus
      5. Capital-Raising Channels
      6. Emulation before Innovation
      7. Placement Agents and Third-Party Marketers
      8. Hedge Fund Marketing and Capital-Raising FAQs
      9. Conclusion
    7. Chapter 5: Long/Short Equity Strategy
      1. Identifying the Opportunity
      2. Discretionary Strategies
      3. Quantitative Strategies
      4. How the Long/Short Strategy Works
      5. Access to Long/Short Strategies
      6. Fee Structure
      7. Taxes
      8. Specialization versus Generalization
      9. Who Runs a Long/Short Hedge Fund?
      10. Risks
      11. Conclusion
    8. Chapter 6: Global Macro Strategy
      1. Discretionary versus Systematic
      2. Leverage
      3. Types of Products
      4. Who Runs a Macro Fund?
      5. Why Invest in a Global Macro Fund?
      6. Conclusion
    9. Chapter 7: Event-Driven Strategy
      1. Who Runs an Event-Driven Fund?
      2. How to Invest Around Events
      3. Risks
      4. Why Invest in an Event-Driven Hedge Fund?
      5. Conclusion
    10. Chapter 8: Fixed-Income Strategy
      1. How Do Fixed-Income Securities Work?
      2. Types of Fixed-Income Products
      3. Corporate Bonds
      4. Municipal Bonds
      5. Arbitrage
      6. Who Runs a Fixed-Income Hedge Fund?
      7. Why Invest in a Fixed Income Fund?
      8. Industry Insight
      9. Conclusion
    11. Chapter 9: Convertible-Arbitrage Strategy
      1. What is a Convertible Bond?
      2. Strategies
      3. Convertible-Arbitrage Risks
      4. Conclusion
    12. Chapter 10: Quantitative and Algorithmic Trading Strategies
      1. Quantitative Trading
      2. Psychology
      3. Algorithmic Trading
      4. High-Frequency Trading
      5. Pattern Recognition
      6. Patterns
      7. Trading Strategies
      8. Industry Insight
      9. Conclusion
    13. Chapter 11: Managed Futures
      1. Defining Managed Futures
      2. Futures Contracts
      3. Limit Movements
      4. Benefits of Managed Futures
      5. How Leverage Affects Returns
      6. Performance
      7. Participants
      8. Analyzing Risk
      9. Fees
      10. Regulation
      11. Trading Strategies
      12. Industry Insight
      13. Conclusion
    14. Chapter 12: Credit- and Asset-Based Lending
      1. Distressed Debt
      2. Evaluating Asset-Based Loans
      3. Hedge Fund History
      4. Second Lien
      5. Risks
      6. How an ABL Strategy Works
      7. Closing an Asset-Based Loan Deal
      8. Industry Insight
      9. Conclusion
    15. Chapter 13: Multi-Strategy Hedge Funds
      1. History of Multi-Strategy Funds
      2. Benefits
      3. Risks
      4. Benchmarks
      5. Fees
      6. Liquidity
      7. Strategies
      8. Why Invest in a Multi-Strategy Fund?
      9. Multi-Strategy Compared to Fund of Funds
      10. Conclusion
      11. Notes
    16. Chapter 14: Fund of Hedge Funds
      1. What Is a Fund of Hedge Funds?
      2. Fund Structure
      3. Fund-of-Funds Operations
      4. Strategies
      5. Fee Structure
      6. Active Portfolio Management and Monitoring
      7. Improved Communication with Managers
      8. Lower Barriers to Entry
      9. Additional Layer of Due Diligence
      10. Diversifying within the Hedge Fund Sector
      11. Economies of Scale
      12. Disadvantages
      13. The Current State of Funds of Hedge Funds
      14. Industry Insight
      15. Conclusion
    17. Appendix A: Bloomberg Functionality Cheat Sheet
    18. Appendix B: Answers to Test-Yourself Quizzes
      1. Chapter 1
      2. Chapter 2
      3. Chapter 3
      4. Chapter 4
      5. Chapter 5
      6. Chapter 6
      7. Chapter 7
      8. Chapter 8
      9. Chapter 9
      10. Chapter 10
      11. Chapter 11
      12. Chapter 12
      13. Chapter 13
      14. Chapter 14
    19. References
    20. About the Author
    21. Index