Introduction by David Brown.
PART I: A PRIMER ON HEDGE FUNDS.
Chapter 1. The Market Goes up Forever? Or The Paradox of Long-Term Investing.
The Flaws of Long-Term Investing.
The Wealth Reducing Effects of Volatility.
“Pure” Equity Risk is Unacceptable.
Diversification to Reduce Risks.
Long-Term Investing with Low Correlated Assets and Downside Protection.
Chapter 2. It’s The Risk, Not The Return: Using Hedge Funds to Reduce Portfolio Risks.
Not Necessarily Higher Returns.
Consistency of Returns.
Low Correlation with the Stock Market.
Portfolio Effects of Hedge Funds .
Alternative Investments in Uncertain Markets.
Prospective Long-Term Returns and Risks of Stocks.
Chapter 3. Going For The Gold: Growth and Strategies of Hedge Funds.
Size of The Hedge Fund Industry.
Investors in Hedge Funds.
What are Hedge Funds?
Hedge Fund Strategies.
Performance of Hedge Funds.
PART II: EVALUATING AND SELECTING HEDGE FUND.
Chapter 4. The Skewed Statistics of Hedge Fund Retur.
Perception of Risks: Numbers and Reality.
Gaming the Sharpe Ratio.
Alpha: Holy Grail or Wizard of Oz?
Returns of Hedge Funds Revisited.
Benefits of Hedge Funds Revisited.
Chapter 5. Evaluating Hedge Fund Strategies.
Is It Uncorrelated, Really?
How Neutral is Market Neutrality?
Market Risks of Hedge Fund Strategies.
Leverage and Hedge Fund Returns.
Low Correlations – The Good and the Poor.
Chapter 6. Picking the Winners.
Sourcing Hedge Funds.
Alpha Generation and Manager Talent.
The Risk and Performance Matrix.
Chapter 7. Constructing a Hedge Fund Portfolio.
Effective Diversification to Reduce Risks.
How Much in Hedge Funds?
How Many Hedge Funds?
Know Your Objectives.
Hedge Fund Portfolios in Practice: Case Examples.
Quantify Your Judgment.
PART III: EVALUATING THE PERFORMANCE AND RISKS.
Chapter 8. Evaluating The Performance of Your Hedge Funds.
How Well is Your Hedge Fund Portfolio?
Basic Concepts of Performance Measurement.
Issues Directly Related to Hedge Funds.
Market and Hedge Fund Indices.
Know Your Managers or Key Drivers of Returns.
Performance Benchmarks in Practice.
Evaluating Performance: A Heuristic Process.
Chapter 9. Buyers Beware: Evaluating and Managing the Many Facets of the Risks of Hedge Funds.
The Many Facets of Hedge Funds’ Risks.
Investment Risks: Ongoing Focus.
Evaluating the Risks of Your Hedge Funds.
“Fat Tail” Risks and Other Quantities.
Ongoing Risk Management: The Risk and Performance Matrix.
Chapter 10. Instant Diversification: Funds of Funds.
Diversification Benefits of Funds of Funds.
Fees and the Price of Access.
Generating Alpha: Portfolio Re-Balancing.
Types of Funds of Funds.
Performance of Funds of Funds.
Investing with Funds of Funds.
Chapter 11. A Practical Guide to Investing in Hedge Funds.