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Absolute Returns: The Risk and Opportunities of Hedge Fund Investing

ISBN: 978-0-471-25120-0
528 pages
October 2002
Absolute Returns: The Risk and Opportunities of Hedge Fund Investing (0471251208) cover image

Description

A practical guide to strategies of hedge fund investing.
Hedge fund expert Alexander Ineichen outlines strategies that hedge fund managers use to achieve superior investment performance, particularly in bear markets, when traditional investment strategies do not perform so well, and shows readers how hedge funds might be added to traditional investment portfolios to achieve superior returns. Nontechnical yet sophisticated, Absolute Returns shows investors how to make educated decisions about hedge fund investment--thoroughly explaining the risks as well as the rewards.
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Table of Contents

Acknowledgments ix

Preface xi

PART ONE The Hedge Fund Industry 1

CHAPTER 1 Introducing Absolute Returns 3

Appendix: Risk Illusion 56

CHAPTER 2 Myths and Misconceptions 59

Appendix: Press Coverage of Hedge Funds 93

CHAPTER 3 Difference between Long-Only and Absolute Return Funds 98

Appendix: Guatemalan Dentist 132

CHAPTER 4 Advantages and Disadvantages of Investing in Hedge Funds 134

Appendix: On Market Efficiency and Unorthodox Economics 159

PART TWO Risk and Opportunities of Absolute Return Strategies 177

CHAPTER 5 Classification and Performance of Hedge Funds 179

CHAPTER 6 Relative-Value and Market-Neutral Strategies 199

CHAPTER 7 Event-Driven Strategies 251

CHAPTER 8 Opportunistic Absolute Return Strategies 286

Appendix: Long/Short Controversy 361

PART THREE The Fund of Hedge Funds Industry 369

CHAPTER 9 Industry Overview 371

CHAPTER 10 Advantages and Disadvantages of Investing in Funds of Hedge Funds 401

CHAPTER 11 The Alpha in Funds of Hedge Funds 420

PART FOUR Going Forward 451

CHAPTER 12 Game of Risk or Risky Game? 453

Notes 479

References 484

Index 499

About the Author 514

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Author Information

ALEXANDER M. INEICHEN, CFA, is Managing Director and Head of Equity Derivatives Research at UBS Warburg in London. In October 2000, Ineichen authored In Search of Alpha: Investing in Hedge Funds, which has become the most often printed research publication in the documented history of UBS Warburg. He has also published several papers in peer-refereed financial journals, contributed numerous articles and chapters to financial newspapers, magazines, and books, and regularly speaks about hedge funds and risk at industry conferences.
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Reviews

“…offers a solid, comprehensive guide to speculators, explaining the risks as well as the rewards. This book is a valuable addition to every investor’s library.” (Financial World, July 2004)

"It should be required reading for any investor who wants to understand the absolute returns alternative to conventional wealth management." (Hedgeworld.com)

“…required reading for any investor who wants to understand the absolute returns alternative to conventional wealth management…” (HedgeWorld’s Inside Edge, 31 March 2003)

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