{"product_id":"alternative-investments-isbn-9781119651680","title":"Alternative Investments","description":"\u003cp\u003e\u003cb\u003eWhether you are a seasoned professional looking to explore new areas within the alternative investment arena or a new industry participant seeking to establish a solid understanding of alternative investments, \u003ci\u003eAlternative Investments: An Allocator's Approach\u003c\/i\u003e, Fourth Edition (CAIA Level II curriculum official text) is the best way to achieve these goals.\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIn recent years, capital formation has shifted dramatically away from public markets as issuers pursue better financial and value alignment with ownership, less onerous and expensive regulatory requirements, market and information dislocation, and liberation from the short-term challenges that undergird the public capital markets. The careful and informed use of alternative investments in a diversified portfolio can reduce risk, lower volatility, and improve returns over the long-term, enhancing investors' ability to meet their investment outcomes. \u003ci\u003eAlternative Investments: An Allocator's Approach\u003c\/i\u003e (CAIA Level II curriculum official text) is a key resource that can be used to improve the sophistication of asset owners and those who work with them.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eThis text comprises the curriculum, when combined with supplemental materials available at caia.org, for the CAIA Level II exam.\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\"Over the course of my long career one tenet has held true, 'Continuing Education'. Since CalSTRS is a teachers' pension plan, it is no surprise that continuing education is a core attribute of our Investment Office culture. Overseeing one of the largest institutional pools of capital in the world requires a cohesive knowledge and understanding of both public and private market investments and strategies. We must understand how these opportunities might contribute to delivering on investment outcomes for our beneficiaries. \u003ci\u003eAlternative Investments: An Allocator's Approach\u003c\/i\u003e is the definitive core instruction manual for an institutional investor, and it puts you in the captain's chair of the asset owner.\"\u003cbr\u003e—\u003cb\u003eChristopher J. Ailman\u003c\/b\u003e, Chief Investment Officer, California State Teachers’ Retirement System\u003c\/p\u003e \u003cp\u003e\"Given their diversified cash flow streams and returns, private markets continue to be a growing fixture of patient, long-term portfolios. As such, the need to have proficiency across these sophisticated strategies, asset classes, and instruments is critical for today's capital allocator. As a proud CAIA charterholder, I have seen the practical benefits in building a strong private markets foundation, allowing me to better assist my clients.\"\u003cbr\u003e—\u003cb\u003eJayne Bok\u003c\/b\u003e, CAIA, CFA, Head of Investments, Asia, Willis Tower Watson\u003c\/p\u003e \u003cp\u003ePreface xxxix\u003c\/p\u003e \u003cp\u003eAcknowlegements xli\u003c\/p\u003e \u003cp\u003eAbout the Authors xlv\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 1 Ethics Regulations and ESG\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Asset Manager Code 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1.1 General Principles of Conduct 3\u003c\/p\u003e \u003cp\u003e1.2 Asset Manager Code 3\u003c\/p\u003e \u003cp\u003e1.3 Notification of Compliance 5\u003c\/p\u003e \u003cp\u003e1.4 Additional Guidance for the Asset Manager Code 6\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Recommendations and Guidance 11\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Global Regulation 27\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e3.1 Overview of Financial Market Regulation 27\u003c\/p\u003e \u003cp\u003e3.2 Regulation of Alternative Investments Within the United States 28\u003c\/p\u003e \u003cp\u003e3.3 Alternative Investment Regulation in Europe 38\u003c\/p\u003e \u003cp\u003e3.4 Hedge Fund Regulation in Asia 45\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 ESG and Alternative Investments 49\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e4.1 Background on ESG and Alternative Investing 49\u003c\/p\u003e \u003cp\u003e4.2 ESG and Real Assets: Natural Resources 51\u003c\/p\u003e \u003cp\u003e4.3 ESG and Real Assets: Commodities 53\u003c\/p\u003e \u003cp\u003e4.4 ESG and Real Assets: Real Estate 55\u003c\/p\u003e \u003cp\u003e4.5 ESG and Hedge Funds 61\u003c\/p\u003e \u003cp\u003e4.6 ESG and Private Equity 66\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 ESG Analysis and Application 71\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e5.1 Background on ESG 71\u003c\/p\u003e \u003cp\u003e5.2 ESG Ratings and Scores 73\u003c\/p\u003e \u003cp\u003e5.3 ESG Materiality and Disclosure 74\u003c\/p\u003e \u003cp\u003e5.4 The United Nations Role in ESG Issues 76\u003c\/p\u003e \u003cp\u003e5.5 ESG Fiduciary Responsibilities and Regulation 78\u003c\/p\u003e \u003cp\u003e5.6 Methods of ESG Investing 80\u003c\/p\u003e \u003cp\u003e5.7 Market-Based Methods of Addressing ESG Issues 85\u003c\/p\u003e \u003cp\u003e5.8 ESG and Special Investment Consideration 87\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 2 Models\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Modeling Overview and Interest Rate Models 93\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e6.1 Types of Models Underlying Investment Strategies 93\u003c\/p\u003e \u003cp\u003e6.2 Equilibrium Fixed-Income Models 96\u003c\/p\u003e \u003cp\u003e6.3 Arbitrage-Free Models of the Term Structure 99\u003c\/p\u003e \u003cp\u003e6.4 The Black–Derman–Toy Model 100\u003c\/p\u003e \u003cp\u003e6.5 P-Measures and Q-Measures 103\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Credit Risk Models 105\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e7.1 The Economics of Credit Risk 105\u003c\/p\u003e \u003cp\u003e7.2 Overview of Credit Risk Modeling 109\u003c\/p\u003e \u003cp\u003e7.3 The Merton Model 110\u003c\/p\u003e \u003cp\u003e7.4 Other Structural Models: KMV 117\u003c\/p\u003e \u003cp\u003e7.5 Reduced-Form Models 120\u003c\/p\u003e \u003cp\u003e7.6 Empirical Credit Models 123\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Multi-Factor Equity Pricing Models 127\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e8.1 Multi-Factor Asset Pricing Models 127\u003c\/p\u003e \u003cp\u003e8.2 FAMA–French Models 131\u003c\/p\u003e \u003cp\u003e8.3 Three Challenges of Empirical Multi-Factor Models 133\u003c\/p\u003e \u003cp\u003e8.4 Factor Investing 135\u003c\/p\u003e \u003cp\u003e8.5 The Adaptive Markets Hypothesis 141\u003c\/p\u003e \u003cp\u003e8.6 Time-Varying Volatility 142\u003c\/p\u003e \u003cp\u003e8.7 Stochastic Discount Factors 143\u003c\/p\u003e \u003cp\u003e8.8 Summary of Multiple-Factor Asset Allocation 145\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Asset Allocation Processes and the Mean-Variance Model 147\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e9.1 Asset Allocation Processes and the Mean-Variance Model 147\u003c\/p\u003e \u003cp\u003e9.2 Implementation of Mean-Variance Optimization 155\u003c\/p\u003e \u003cp\u003e9.3 Mean-Variance Optimization with Multiple Risky Assets 160\u003c\/p\u003e \u003cp\u003e9.4 Mean-Variance Optimization and Hurdle Rates 162\u003c\/p\u003e \u003cp\u003e9.5 Issues in Using Optimization for Portfolio Selection 163\u003c\/p\u003e \u003cp\u003e9.6 Adjustment of the Mean-Variance Approach for Illiquidity 166\u003c\/p\u003e \u003cp\u003e9.7 Adjustment of the Mean-Variance Approach for Factor Exposure 168\u003c\/p\u003e \u003cp\u003e9.8 Mitigating Estimation Error Risk in Mean-Variance Optimization 168\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Other Asset Allocation Approaches 175\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e10.1 The Core–Satellite Approach 175\u003c\/p\u003e \u003cp\u003e10.2 Top-Down and Bottom-Up Asset Allocation Approaches 176\u003c\/p\u003e \u003cp\u003e10.3 Risk Budgeting 178\u003c\/p\u003e \u003cp\u003e10.4 A Factor-Based Example of Implementing A Risk Budgeting Approach 181\u003c\/p\u003e \u003cp\u003e10.5 Risk Parity 183\u003c\/p\u003e \u003cp\u003e10.6 Other Quantitative Portfolio Allocation Strategies 189\u003c\/p\u003e \u003cp\u003e10.7 The New Investment Model 193\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 3 Institutional Asset Owners and Investment Policies\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Types of Asset Owners and the Investment Policy Statement 197\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e11.1 Endowments and Foundations 197\u003c\/p\u003e \u003cp\u003e11.2 Pension Funds 198\u003c\/p\u003e \u003cp\u003e11.3 Sovereign Wealth Funds 199\u003c\/p\u003e \u003cp\u003e11.4 Family Offices 199\u003c\/p\u003e \u003cp\u003e11.5 Strategic Asset Allocation: Risk and Return 199\u003c\/p\u003e \u003cp\u003e11.6 Asset Allocation Objectives 202\u003c\/p\u003e \u003cp\u003e11.7 Investment Policy Constraints 202\u003c\/p\u003e \u003cp\u003e11.8 Investment Policy Statements for Institutional Asset Owners 204\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Foundations and the Endowment Model 221\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e12.1 Defining Endowments and Foundations 221\u003c\/p\u003e \u003cp\u003e12.2 Intergenerational Equity, Inflation, and Spending Challenges 224\u003c\/p\u003e \u003cp\u003e12.3 The Endowment Model 226\u003c\/p\u003e \u003cp\u003e12.4 Why Might Large Endowments Outperform? 228\u003c\/p\u003e \u003cp\u003e12.5 Risks of the Endowment Model 234\u003c\/p\u003e \u003cp\u003e12.6 Liquidity Rebalancing and Tactical Asset Allocation 239\u003c\/p\u003e \u003cp\u003e12.7 Tail Risk 240\u003c\/p\u003e \u003cp\u003e12.8 Conclusion 242\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Pension Fund Portfolio Management 245\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e13.1 Development, Motivations, and Types of Pension Plans 245\u003c\/p\u003e \u003cp\u003e13.2 Risk Tolerance and Asset Allocation 247\u003c\/p\u003e \u003cp\u003e13.3 Defined Benefit Plans 251\u003c\/p\u003e \u003cp\u003e13.4 Governmental Social Security Plans 258\u003c\/p\u003e \u003cp\u003e13.5 Contrasting Defined Benefit and Contribution Plans 259\u003c\/p\u003e \u003cp\u003e13.6 Annuities for Retirement Income 262\u003c\/p\u003e \u003cp\u003e13.7 Conclusion 266\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Sovereign Wealth Funds 269\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e14.1 Sources of Sovereign Wealth 269\u003c\/p\u003e \u003cp\u003e14.2 Four Types of Sovereign Wealth Funds 272\u003c\/p\u003e \u003cp\u003e14.3 Establishment and Management of Sovereign Wealth Funds 274\u003c\/p\u003e \u003cp\u003e14.4 Governance and Political Risks of SWFs 277\u003c\/p\u003e \u003cp\u003e14.5 Analysis of Three Sovereign Wealth Funds 279\u003c\/p\u003e \u003cp\u003e14.6 Conclusion 282\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Family Offices and the Family Office Model 285\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e15.1 Identifying Family Offices 285\u003c\/p\u003e \u003cp\u003e15.2 Goals, Benefits, and Business Models of Family Offices 286\u003c\/p\u003e \u003cp\u003e15.3 Family Office Goals by Generations 290\u003c\/p\u003e \u003cp\u003e15.4 Macroeconomic Exposures of Family Offices 295\u003c\/p\u003e \u003cp\u003e15.5 Income Taxes of Family Offices 297\u003c\/p\u003e \u003cp\u003e15.6 Lifestyle Assets of Family Offices 300\u003c\/p\u003e \u003cp\u003e15.7 Family Office Governance 304\u003c\/p\u003e \u003cp\u003e15.8 Charity, Philanthropy, and Impact Investing 307\u003c\/p\u003e \u003cp\u003e15.9 Ten Competitive Advantages of Family Offices 310\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 4 Risk and Risk Management\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Cases in Tail Risk 315\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e16.1 Problems Driven by Market Losses 315\u003c\/p\u003e \u003cp\u003e16.2 Trading Technology and Financial Crises 324\u003c\/p\u003e \u003cp\u003e16.3 Failures Driven by Fraud 326\u003c\/p\u003e \u003cp\u003e16.4 Four Major lessons From cases in Tail Events 334\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 Benchmarking and Performance Attribution 337\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e17.1 Benchmarking and Performance Attribution Overview 337\u003c\/p\u003e \u003cp\u003e17.2 Single-Factor Benchmarking and Performance Attribution 340\u003c\/p\u003e \u003cp\u003e17.3 Multi-Factor Benchmarking 344\u003c\/p\u003e \u003cp\u003e17.4 Distinctions Regarding Alternative Asset Benchmarking 346\u003c\/p\u003e \u003cp\u003e17.5 Benchmarking of Commodities 348\u003c\/p\u003e \u003cp\u003e17.6 Three Approaches to Benchmarking Managed Futures Funds 351\u003c\/p\u003e \u003cp\u003e17.7 Benchmarking Private Equity Funds 352\u003c\/p\u003e \u003cp\u003e17.8 Group Peer Returns as Benchmarks 357\u003c\/p\u003e \u003cp\u003e17.9 Benchmarking Real Estate 358\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18 Liquidity and Funding Risks 363\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e18.1 Margin Accounts and Collateral Management 363\u003c\/p\u003e \u003cp\u003e18.2 Value at Risk for Managed Futures 367\u003c\/p\u003e \u003cp\u003e18.3 Other Methods of Estimating Liquidity Needs 369\u003c\/p\u003e \u003cp\u003e18.4 Smoothed Returns on Illiquid Funds 373\u003c\/p\u003e \u003cp\u003e18.5 Modeling Price and Return Smoothing 375\u003c\/p\u003e \u003cp\u003e18.6 Unsmoothing a Hypothetical Return Series 378\u003c\/p\u003e \u003cp\u003e18.7 Unsmoothing Actual Real Estate Return Data 380\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 19 Hedging, Rebalancing, and Monitoring 389\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e19.1 Managing Alpha and Systematic Risk 389\u003c\/p\u003e \u003cp\u003e19.2 Managing the Risk of a Portfolio with Options 391\u003c\/p\u003e \u003cp\u003e19.3 Delta-Hedging of Option Positions 394\u003c\/p\u003e \u003cp\u003e19.4 Three Key Observations on Delta-Hedging 399\u003c\/p\u003e \u003cp\u003e19.5 Three Observations on Rebalancing Delta-Neutral Option Portfolios 400\u003c\/p\u003e \u003cp\u003e19.6 Rebalancing Portfolios with Directional Exposures 401\u003c\/p\u003e \u003cp\u003e19.7 Mean-Reversion and Diversification Return 407\u003c\/p\u003e \u003cp\u003e19.8 Investment Monitoring 409\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 20 Risk Measurement, Risk Management, and Risk Systems 413\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e20.1 Overview of Risk Measurement and Aggregation 413\u003c\/p\u003e \u003cp\u003e20.2 Categories of Information to be Considered 422\u003c\/p\u003e \u003cp\u003e20.3 Risk Measurement with Daily Frequency of Data Collection 424\u003c\/p\u003e \u003cp\u003e20.4 Risk Measurement with Weekly Frequency of Data Collection 425\u003c\/p\u003e \u003cp\u003e20.5 Risk Measurement with Monthly Frequency of Data Collection 426\u003c\/p\u003e \u003cp\u003e20.6 Risk Measurement with Quarterly Frequency of Data Collection 427\u003c\/p\u003e \u003cp\u003e20.7 Risk Measurement with Annual Frequency of Data Collection or Rolling Time Periods 427\u003c\/p\u003e \u003cp\u003e20.8 Cybersecurity for Fund Managers 429\u003c\/p\u003e \u003cp\u003e20.9 Risk Management Structure and Process 432\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 5 Methods for Alternative Investing\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 21 Valuation and Hedging Using Binomial Trees 439\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e21.1 A One-Period Binomial Tree and Risk-Neutral Modeling 439\u003c\/p\u003e \u003cp\u003e21.2 Multi-Period Binomial Trees, Values, and Mean Rates 442\u003c\/p\u003e \u003cp\u003e21.3 Valuation of Convertible Securities with a Binomial Tree Model 445\u003c\/p\u003e \u003cp\u003e21.4 Valuing Callable Bonds with a Tree Model 452\u003c\/p\u003e \u003cp\u003e21.5 Tree Models, Visualization, and Two Benefits to Spreadsheets 458\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 22 Directional Strategies and Methods 459\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e22.1 Efficiently Inefficient Markets 459\u003c\/p\u003e \u003cp\u003e22.2 Technical Directional Strategies Overview 460\u003c\/p\u003e \u003cp\u003e22.3 Fundamental Directional Strategies 467\u003c\/p\u003e \u003cp\u003e22.4 Directional Strategies and Behavioral Finance 473\u003c\/p\u003e \u003cp\u003e22.5 Directional Trading and Factors 476\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 23 Multivariate Empirical Methods and Performance Persistence 479\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e23.1 Statistical Factors and Principal Component Analysis 479\u003c\/p\u003e \u003cp\u003e23.2 Multi-Factor Models and Regression 483\u003c\/p\u003e \u003cp\u003e23.3 Partial Autocorrelations and Regression 485\u003c\/p\u003e \u003cp\u003e23.4 Three Dynamic Risk Exposure Models 487\u003c\/p\u003e \u003cp\u003e23.5 Two Approaches to Modeling Changing Correlation 489\u003c\/p\u003e \u003cp\u003e23.6 Four Multi-Factor Approaches to Understanding Returns 493\u003c\/p\u003e \u003cp\u003e23.7 Evidence on Fund Performance Persistence 496\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 24 Relative Value Methods 499\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e24.1 Overview of Relative Value Methods 499\u003c\/p\u003e \u003cp\u003e24.2 Types of Pairs Trading and the Four Typical Steps 502\u003c\/p\u003e \u003cp\u003e24.3 Statistical Pairs Trading of Equities 503\u003c\/p\u003e \u003cp\u003e24.4 Pairs Trading in Commodity Markets Based on Spreads 506\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 25 Valuation Methods for Private Assets: The Case of Real Estate 519\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e25.1 Depreciation Tax Shields 519\u003c\/p\u003e \u003cp\u003e25.2 Deferral of Taxation of Gains 522\u003c\/p\u003e \u003cp\u003e25.3 Comparing After-Tax Returns for Various Taxation Scenarios 524\u003c\/p\u003e \u003cp\u003e25.4 Transaction-Based Indices: Repeat-Sales 529\u003c\/p\u003e \u003cp\u003e25.5 Transaction-Based Indices: Hedonic 532\u003c\/p\u003e \u003cp\u003e25.6 Sample Bias and the Repeat-Sales and Hedonic-Price Methods 535\u003c\/p\u003e \u003cp\u003e25.7 Appraisal-Based Indices 536\u003c\/p\u003e \u003cp\u003e25.8 Noisy Pricing 537\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 6 Accessing Alternative Investments\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 26 Hedge Fund Replication 543\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e26.1 An Overview of Replication Products 543\u003c\/p\u003e \u003cp\u003e26.2 Potential Benefits of Replication Products 544\u003c\/p\u003e \u003cp\u003e26.3 The Case for Hedge Fund Replication 545\u003c\/p\u003e \u003cp\u003e26.4 Unique Benefits of Replication Products 549\u003c\/p\u003e \u003cp\u003e26.5 Factor-Based Approach to Replication 552\u003c\/p\u003e \u003cp\u003e26.6 The Algorithmic (Bottom-Up) Approach 558\u003c\/p\u003e \u003cp\u003e26.7 Three Illustrations of the Algorithmic (Bottom-Up) Approach 558\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 27 Diversified Access to Hedge Funds 565\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e27.1 Evidence Regarding Hedge Fund Risk and Returns 565\u003c\/p\u003e \u003cp\u003e27.2 Approaches to Accessing Hedge Funds 569\u003c\/p\u003e \u003cp\u003e27.3 Characteristics of Funds of Hedge Funds 573\u003c\/p\u003e \u003cp\u003e27.4 Fund of Hedge Funds Portfolio Construction 577\u003c\/p\u003e \u003cp\u003e27.5 Ways that Funds of Hedge Funds Can Add Value 580\u003c\/p\u003e \u003cp\u003e27.6 Investable Hedge Fund Indices 584\u003c\/p\u003e \u003cp\u003e27.7 Alternative Mutual Funds 585\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 28 Access to Real Estate and Commodities 589\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e28.1 Unlisted Real Estate Funds 589\u003c\/p\u003e \u003cp\u003e28.2 Listed Real Estate Funds 594\u003c\/p\u003e \u003cp\u003e28.3 Commodities 598\u003c\/p\u003e \u003cp\u003e28.4 Commodity Trade Financing and Production Financing 606\u003c\/p\u003e \u003cp\u003e28.5 Leveraged and Option-Based Structured Commodity Exposures 606\u003c\/p\u003e \u003cp\u003e28.6 Key Concepts in Managing Commodity Exposure 609\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 29 Access Through Private Structures 613\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e29.1 Overview of Issues in Private Versus Listed Investment Access 613\u003c\/p\u003e \u003cp\u003e29.2 Unlisted Manager–Investor Relationships 616\u003c\/p\u003e \u003cp\u003e29.3 Side Letters to Limited Partnership Agreements 619\u003c\/p\u003e \u003cp\u003e29.4 Co-Investments 621\u003c\/p\u003e \u003cp\u003e29.5 Cash Commitments and Illiquidity 626\u003c\/p\u003e \u003cp\u003e29.6 The Secondary Market for PE Partnerships 629\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 30 The Risk and Performance of Private and Listed Assets 637\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e30.1 Evidence on an Illiquidity Premium from Listed Assets 637\u003c\/p\u003e \u003cp\u003e30.2 Private Versus Listed Real Performance: The Case of Real Estate 639\u003c\/p\u003e \u003cp\u003e30.3 Challenges with the PME Method to Evaluating Private Asset Performance 641\u003c\/p\u003e \u003cp\u003e30.4 Multiple Evaluation Tools 648\u003c\/p\u003e \u003cp\u003e30.5 IRR Aggregation Problems for Portfolios 653\u003c\/p\u003e \u003cp\u003e30.6 The Case Against Private Equity 657\u003c\/p\u003e \u003cp\u003e30.7 Two Propositions Regarding Access Through Private Versus Listed Structures 658\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 7 Due Diligence \u0026amp; Selecting Managers\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 31 Active Management and New Investments 663\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e31.1 Tactical Asset Allocation 663\u003c\/p\u003e \u003cp\u003e31.2 The Fundamental Law of Active Management 664\u003c\/p\u003e \u003cp\u003e31.3 Costs of Actively Reallocating Across Alternative Investments 667\u003c\/p\u003e \u003cp\u003e31.4 Keys to a Successful Tactical Asset Allocation Process 670\u003c\/p\u003e \u003cp\u003e31.5 Adjusting Exposures to Illiquid Partnerships 674\u003c\/p\u003e \u003cp\u003e31.6 The Secondary Market for PE LP Interests 676\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 32 Selection of a Fund Manager 683\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e32.1 The Importance of Fund Selection Across Managers Through Time 683\u003c\/p\u003e \u003cp\u003e32.2 The Relationship Life Cycle Between LPs and GPs 683\u003c\/p\u003e \u003cp\u003e32.3 Fund Return Persistence 688\u003c\/p\u003e \u003cp\u003e32.4 Moral Hazard, Adverse Selection, and the Holdup Problem in Fund Management 694\u003c\/p\u003e \u003cp\u003e32.5 Screening with Fundamental Questions 694\u003c\/p\u003e \u003cp\u003e32.6 Historical Performance Review 698\u003c\/p\u003e \u003cp\u003e32.7 Manager Selection and Deal Sourcing 703\u003c\/p\u003e \u003cp\u003e32.8 Fund Culture 705\u003c\/p\u003e \u003cp\u003e32.9 Decision-Making and Commitment and Manager Selection 706\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 33 Investment Process Due Diligence 709\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e33.1 Overview of Investment Due Diligence 709\u003c\/p\u003e \u003cp\u003e33.2 The Investment Strategy or Mandate 712\u003c\/p\u003e \u003cp\u003e33.3 The Investment Implementation Process and its Risks 715\u003c\/p\u003e \u003cp\u003e33.4 Asset Custody and Valuation 717\u003c\/p\u003e \u003cp\u003e33.5 Risk Alert’s One Advantage and Six Observations on Third-Party Information 723\u003c\/p\u003e \u003cp\u003e33.6 Portfolio Risk Review 725\u003c\/p\u003e \u003cp\u003e33.7 Four Warning Indicators and Awareness Signals Regarding Investments 729\u003c\/p\u003e \u003cp\u003e33.8 Four Warning Indicators and Awareness Signals Regarding Risk Management 729\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 34 Operational Due Diligence 731\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e34.1 Operations: Overview, Risks, and Remedies 731\u003c\/p\u003e \u003cp\u003e34.2 Four Key Operational Activities 735\u003c\/p\u003e \u003cp\u003e34.3 Analyzing Fund Cash Management and Movement 737\u003c\/p\u003e \u003cp\u003e34.4 Analyzing External Parties and Checking Principals 739\u003c\/p\u003e \u003cp\u003e34.5 Analyzing Fund Compliance 743\u003c\/p\u003e \u003cp\u003e34.6 Onsite Manager Visits 747\u003c\/p\u003e \u003cp\u003e34.7 Elements and Key Concerns of the Odd Process 748\u003c\/p\u003e \u003cp\u003e34.8 Information Technology and Meta Risks 749\u003c\/p\u003e \u003cp\u003e34.9 Funding, Applying, and Concluding ODD 750\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 35 Due Diligence of Terms and Business Activities 755\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e35.1 Due Diligence Document Collection Process 755\u003c\/p\u003e \u003cp\u003e35.2 Fund Governance 757\u003c\/p\u003e \u003cp\u003e35.3 Structural Review of the Fund And Fund Manager 758\u003c\/p\u003e \u003cp\u003e35.4 Terms for Liquid Private Funds 761\u003c\/p\u003e \u003cp\u003e35.5 Terms for Illiquid Private Funds 763\u003c\/p\u003e \u003cp\u003e35.6 General Terms for Private Funds 764\u003c\/p\u003e \u003cp\u003e35.7 Private Placement Memorandum (PPM) 765\u003c\/p\u003e \u003cp\u003e35.8 Fund Fees and Expenses 769\u003c\/p\u003e \u003cp\u003e35.9 Private Fund Audited Financial Statement Review 771\u003c\/p\u003e \u003cp\u003e35.10 Business Activities, Continuity Planning, Disaster Recovery, and Insurance 773\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart 8 Volatility and Complex Strategies\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 36 Volatility as a Factor Exposure 779\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e36.1 Measures of Volatility 779\u003c\/p\u003e \u003cp\u003e36.2 Volatility and the Vegas, Gammas, and Thetas of Options 781\u003c\/p\u003e \u003cp\u003e36.3 Exposures to Volatility as a Factor 785\u003c\/p\u003e \u003cp\u003e36.4 Modeling Volatility Processes 791\u003c\/p\u003e \u003cp\u003e36.5 Implied Volatility Structures 794\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 37 Volatility, Correlation, and Dispersion Products and Strategies 799\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e37.1 Common Option Strategies and their Volatility Exposures 799\u003c\/p\u003e \u003cp\u003e37.2 Volatility and Delta-Neutral Portfolios with Options 803\u003c\/p\u003e \u003cp\u003e37.3 Advanced Option-Based Volatility Strategies 805\u003c\/p\u003e \u003cp\u003e37.4 Variance-Based and Volatility-Based Derivative Products 807\u003c\/p\u003e \u003cp\u003e37.5 Correlation Swaps 815\u003c\/p\u003e \u003cp\u003e37.6 Dispersion Trades 818\u003c\/p\u003e \u003cp\u003e37.7 Summary and Common Themes of Volatility, Correlation, and Dispersion Trading 819\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 38 Complexity and Structured Products 825\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e38.1 Uncertainty, Ambiguity, and Opacity 825\u003c\/p\u003e \u003cp\u003e38.2 Asset and Strategy Complexity 827\u003c\/p\u003e \u003cp\u003e38.3 Cases in Complexity and Perverse Incentives 828\u003c\/p\u003e \u003cp\u003e38.4 Asset-Based Lending 831\u003c\/p\u003e \u003cp\u003e38.5 Risks of Asset-Based Loans 836\u003c\/p\u003e \u003cp\u003e38.6 Asset-Backed Securities 838\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 39 Insurance-Linked Products and Hybrid Securities 845\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e39.1 Nonlife ILS: Catastrophe Bonds 845\u003c\/p\u003e \u003cp\u003e39.2 Four Trigger Types of Cat Bonds 847\u003c\/p\u003e \u003cp\u003e39.3 Cat Bond Valuation, Performance, and Drawbacks 849\u003c\/p\u003e \u003cp\u003e39.4 Longevity and Mortality Risk-Related Products 852\u003c\/p\u003e \u003cp\u003e39.5 Life Insurance Settlements 855\u003c\/p\u003e \u003cp\u003e39.6 Overview of Viatical Settlements 857\u003c\/p\u003e \u003cp\u003e39.7 Hybrid Products: Mezzanine Debt 859\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 40 Complexity and the Case of Cross-Border Real Estate Investing 865\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e40.1 Traditional View of Currency-Hedging for Cross-Border Real Estate Investing 865\u003c\/p\u003e \u003cp\u003e40.2 Fundamentals of Currency Risk And Hedging in Perfect Markets 870\u003c\/p\u003e \u003cp\u003e40.3 Currency Risk and Hedging of Alternative Investments 873\u003c\/p\u003e \u003cp\u003e40.4 Accessing Foreign Assets with Futures and Quanto Futures 876\u003c\/p\u003e \u003cp\u003e40.5 Overview of International Real Estate Investing 879\u003c\/p\u003e \u003cp\u003e40.6 Heterogenous Investment Taxation Across Jurisdictions 881\u003c\/p\u003e \u003cp\u003e40.7 Challenges to International Real Estate Investing 882\u003c\/p\u003e \u003cp\u003eIndex 887 \u003c\/p\u003e  \u003cp\u003e\u003cb\u003eD\u003csmall\u003eR\u003c\/small\u003e. DONALD R. CHAMBERS, PhD, CAIA\u003c\/b\u003e, is Associate Director of Programs at the CAIA Association; Chief Investment Officer of Biltmore Capital Advisors and Emeritus Professor at Lafayette College in Easton, Pennsylvania. Dr. Chambers previously served as Director of Alternative Investments at Karpus Investment Management. He is a member of the editorial board of \u003ci\u003eThe Journal of Alternative Investments\u003c\/i\u003e. \u003c\/p\u003e\u003cp\u003e\u003cb\u003eD\u003csmall\u003eR\u003c\/small\u003e. HOSSEIN KAZEMI, PhD,\u003c\/b\u003e is a senior adviser to the CAIA Association. He is the Michael and Cheryl Philipp Professor of Finance at the University of Massachusetts, Amherst; Director of the Center for International Securities and Derivatives Markets; a cofounder of the CAIA Association; and Editor-in-Chief of \u003ci\u003eThe Journal of Alternative Investments\u003c\/i\u003e—the official publication of the CAIA Association and a member of the editorial board of \u003ci\u003eThe Journal of Financial Data Science\u003c\/i\u003e. \u003c\/p\u003e\u003cp\u003e\u003cb\u003eD\u003csmall\u003eR\u003c\/small\u003e. KEITH H. BLACK, PhD, CAIA, FDP,\u003c\/b\u003e is the Managing Director of Content Strategy at the CAIA Association. He was previously an associate at Ennis Knupp and, before that, an assistant professor at Illinois Institute of Technology. He is a member of the editorial board of \u003ci\u003eThe Journal of Alternative Investments\u003c\/i\u003e.  \u003c\/p\u003e\u003cp\u003eSuccess in the rapidly evolving area of alternative investments depends on a deep understanding of the concepts, tools, and practices associated with it, as well as an unwavering dedication to professionalism.\u003c\/p\u003e \u003cp\u003eWritten under the direction of the CAIA Association, with insights from many practicing and eminent professionals in this field, \u003ci\u003eAlternative Investments: An Allocator's Approach\u003c\/i\u003e, Fourth Edition takes a top-down view of the role of an asset allocator, focusing on manager selection, risk management, and asset allocation combining both traditional and alternative investments. This is the companion volume to Alternative Investments: An Analyst's Approach, Fourth Edition, which takes a bottom-up view of alternative investments, explaining hedge funds and managed futures; commodities, real estate and real assets; structured products and credit derivatives; as well as private equity, venture capital, and private debt.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eThis comprehensive resource:\u003c\/b\u003e\u003c\/p\u003e \u003cul\u003e \u003cli\u003eDiscusses advanced topics in alternative investments—from models and methods to liquidity risk and operational due diligence\u003c\/li\u003e \u003cli\u003eAddresses asset allocation and risk management techniques suitable for the construction and management of multi-asset portfolios\u003c\/li\u003e \u003cli\u003eDiscusses the role of asset allocators at sovereign wealth funds, pension funds, family offices, endowments, and foundations\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eIf you are serious about understanding alternative investments, take the time to consider the insights offered here.\u003cbr\u003e\u003cbr\u003e\u003c\/p\u003e \u003cp\u003eThe Chartered Alternative Investment Analyst (CAIA) Association® is a global professional body dedicated to creating greater alignment, transparency, and knowledge for all investors, with a specific emphasis on alternative investments. A Member-driven organization representing professionals in more than 95 countries, CAIA Association advocates for the highest ethical standards. The organization provides unbiased insight on a broad range of investment strategies and industry issues, key among them being efforts to bring greater diversification to portfolio construction decisions to achieve better long-term investor outcomes. To learn more about the CAIA Association and how to become part of the organization's mission, \u003cb\u003eplease visit https:\/\/caia.org\/\u003c\/b\u003e.\u003c\/p\u003e \u003cp\u003eThe CAIA Charter is the only educational standard uniquely designed for individuals specializing in institutional-quality alternative investments. Covering hedge funds, managed futures, real assets, private equity, commodities, structured products, risk management and portfolio management, and professional standards and ethics, the CAIA Charter demonstrates one's commitment to professionalism and command of alternative investments' unique fundamentals, setting you and your firm apart from the competition.\u003c\/p\u003e \u003cp\u003eThe CAIA program is comprised of a two-tier exam process (Level I and Level II) through which you may earn the CAIA Charter. The Level I exam assesses your understanding of various alternative classes and your knowledge of the tools and techniques used to evaluate the risk-return attributes of each one. The Level II exam assesses how you would apply the knowledge and analytics learned in Level I within a portfolio management context. Both levels incorporate segments on ethics and professional conduct, which are essential components of the CAIA program. Information regarding the \u003cb\u003eCAIA exams can be found at https:\/\/caia.org\/programs\/the-caia-charter\u003c\/b\u003e.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eAlternative Investments\u003c\/b\u003e\u003cbr\u003e\u003cb\u003eAn Allocator’s Approach\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhether you are a seasoned professional looking to explore new areas within the alternative investment arena or a new industry participant seeking to establish a solid understanding of alternative investments, \u003ci\u003eAlternative Investments: An Allocator’s Approach, Fourth Edition\u003c\/i\u003e is the best way to achieve these goals.\u003c\/p\u003e \u003cp\u003eIn recent years, capital formation has shifted dramatically away from public markets as issuers pursue better financial and value alignment with ownership, less onerous and expensive regulatory requirements, market and information dislocation, and liberation from the short-term challenges that undergird the public capital markets. The careful and informed use of alternative investments in a diversified portfolio can reduce risk, lower volatility, and improve returns over the long-term, enhancing investors’ ability to meet their investment outcomes. \u003ci\u003eAlternative Investments: An Allocator’s Approach\u003c\/i\u003e is a key resource that can be used to improve the sophistication of asset owners and those who work with them.\u003c\/p\u003e \u003cp\u003e“Over the course of my long career one tenet has held true, ‘Continuing Education’. Since CalSTRS is a teachers’ pension plan, it is no surprise that continuing education is a core attribute of our Investment Office culture. Overseeing one of the largest institutional pools of capital in the world requires a cohesive knowledge and understanding of both public and private market investments and strategies. We must understand how these opportunities might contribute to delivering on investment outcomes for our beneficiaries. \u003ci\u003eAlternative Investments: An Allocator’s Approach\u003c\/i\u003e is the definitive core instruction manual for an institutional investor, and it puts you in the captain’s chair of the asset owner.”\u003cbr\u003e\u003cb\u003e—Christopher, J. Ailman, Chief Investment Officer, California State Teachers’ Retirement System\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e“Given their diversified cash flow streams and returns, private markets continue to be a growing fixture of patient, long-term portfolios. As such, the need to have proficiency across these sophisticated strategies, asset classes, and instruments is critical for today’s capital allocator. As a proud CAIA charterholder, I have seen the practical benefits in building a strong private markets foundation, allowing me to better assist my clients.”\u003cbr\u003e\u003cb\u003e—Jayne Bok, CAIA, CFA, Head of Investments, Asia, Willis Tower Watson\u003c\/b\u003e\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47988716339429,"sku":"NP9781119651680","price":125.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119651680.jpg?v=1761781308","url":"https:\/\/k12savings.com\/products\/alternative-investments-isbn-9781119651680","provider":"K12savings","version":"1.0","type":"link"}