Study Notes for CFA® Level III – Active Equity Investing: Strategies – offered by AnalystPrep
Reading 25: Active Equity Investing: Strategies Los 25 a: Compare fundamental and quantitative approaches to active management Los 25 b: Analyze bottom-up active strategies, including their rationale and associated processes Los 25 c: Analyze top-down active strategies, including their rationale…
Study Notes for CFA® Level III – Active Equity Investing: Portfolio Construction – offered by AnalystPrep
Reading 26: Active Equity Investing: Portfolio Construction Los 26 a: Describe elements of a manager’s investment philosophy that influence the portfolio construction process Los 26 b: Discuss approaches for constructing actively managed equity portfolios Los 26 c: Discuss approaches for…
Study Notes for CFA® Level III – Hedge Fund Strategies – offered by AnalystPrep
Reading 27: Hedge Fund Strategies Los 27 a: Discuss how hedge fund strategies may be classified Los 27 b: Discuss investment characteristics, strategy implementation, and role in a portfolio of equity-related hedge fund strategies Los 27 c: Discuss investment characteristics,…
Hedge Fund Strategy Portfolio Contributions
Performance Contribution to a 60/40 Portfolio What is the potential impact of adding a hedge fund allocation to the traditional 60/40 (stock/ bond) portfolio? Consider a traditional 60%/40% portfolio. 20% allocation of a hedge fund strategy group is added…
Assessing Hedge Fund Strategies through a Conditional Factor Risk Model
Different hedge fund strategies exhibit unique risk factor exposures and vulnerabilities. Linear factor models, like the conditional factor model used in this analysis, offer valuable insights into hedge fund investments' inherent characteristics and risks. These models help assess whether hedge…
Multi-Manager Strategies
Fund-of-Funds Fund-of-funds (FoF) managers pool investor capital and distribute it to a diversified portfolio of individual hedge funds with distinct and less correlated strategies. Their key responsibilities encompass diversification, occasional strategic reallocation, manager selection, due diligence, ongoing portfolio management, risk…
Specialist Strategies
Volatility Trading In recent decades, volatility trading has emerged as a distinct asset class. Specialized hedge fund managers now focus on trading relative volatility strategies across various geographic regions and asset classes. For instance, Asia offers relatively cheap volatility pricing…
Opportunistic Strategies: Global Macro Strategies
Global macro strategies encompass asset classes and investment instruments, including commodities, currencies, metals, fixed-income, and equities. These strategies aim to identify opportunities by examining global relationships. Global macro managers focus on specific themes, regions, or styles and typically hold views…
Relative Value Strategies: Fixed-Income Arbitrage
Fixed-income arbitrage strategies aim to capitalize on pricing inefficiencies by simultaneously taking long and short positions in various debt securities, such as government and corporate bonds, bank loans, and consumer debt (including credit card loans, student loans, and mortgage-backed securities)….
Event-driven Strategies: Merger Arbitrage
Event-driven (E.D.) hedge fund strategies involve the practice of taking positions in corporate securities and derivatives. These positions are taken with the aim of profiting from various corporate events, such as mergers and acquisitions, bankruptcies, share issuances, buybacks, capital restructurings,…
