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Hedge Funds: Myths and Limits

François-Serge Lhabitant

ISBN: 978-0-470-84477-9 May 2002 284 Pages


Full coverage of how hedge funds work, from risks to rewards
L'Habitant discusses--from an investor's perspective--the potential uses, risks, and returns in hedge funds, while offering both the qualitative and quantitative tools investors need to access these types of funds. Topics not normally covered in discussions of hedge funds are included, such as how to include hedge funds in traditional portfolios, database differences, and non-transparency. A practical guide to a growing, yet little understood, segment of the financial industry.
Francois-Serge L'Habitant, PhD (Geneva, Switzerland), is Head of Quantitative Risk Management at Union Bancaire Privee in Geneva, Switzerland. A former computer engineer, he previously served as Director of UBS Private Banking Division.
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Part One Hedge Fund Overview

The Basics Revisited.

Legal Environment and Structures.

Operational and Organizational Structures.

Part Two Hedge Fund Strategies

Introduction to Strategies.

The Tools used by Hedge Funds.

Long/Short Strategies.

Arbitrage and Relative Value Strategies.

Event-Driven Strategies.

Directional Strategies.

Hedge Fund Indices.

Hedge Fund Performance: Beyond Net Asset Values.

Part Three Hedge Fund Investing


Asset Allocation

Hedge Fund Selection

Funds of Funds: The Quest for Meta-diversification.

Capital Guaranteed Products.

Advanced Topics: inside the black box


Appendix: The Statistics of Hedge Funds.

Useful Sources of Information.
“Balanced, Constructive and instructive, this is an essential read for investors, portfolio managers and financial advisers.” (Financial World, July 2004)