Alternative Investment project part two

Question

In this assignment you will prepare a PowerPoint presentation you will include the following: Summarize your research into Hedge Funds. In the first 2 slides, you will simply tell your audience which type of specific asset you will be focusing on and summarize the key characteristics of this investment. Keep in mind that Hedge funds are investment pools that offer greater flexibility than traditional pools of investments, such as stocks and bonds; Hedge funds offer such features as large short positions, high degrees of leverage, and rapidly changing risk exposures; and Hedge funds are often structured as private placement vehicles, where the funds are not publicly listed on a securities exchange. Provide recommendations, either for or against, investing in a specific type of Hedge Fund In this slide, you will simply provide your audience with a recommendation on the type of specific asset you are focusing on. Keep in mind that your recommendation might be somewhat nuanced. In other words, the type of specific asset you are focusing on may have both positive and negative prospects. In other words, there may exist a mixed picture of your specific assets, and if so, you will need to briefly inform your audience what these might entail. Provide your rationale for your recommendations. In other words, you will discuss the risk and return potential for your recommendations. In the last 2 slides, you will discuss the risk and return potential for your specific asset/investment recommendations. What are the potential returns? What are the potential losses? How liquid is the asset? Does this asset help diversify a portfolio to reduce risk, or increase it? Essentially you will summarize the upside and downside of this asset. References Make sure all references are cited using APA format for presentations. Appendices (optional) Attach any original data that relates to your presentation, but which does not belong in the body of the submission (e.g., too large and would interrupt the flow of the presentation). Important Note: At the end of the course, you will present a 20 slide PowerPoint presentation as your culminating project where you will use VoiceThread to present your final project with a summary of your research findings and your final recommendation. **add/continue from the powerpoint to the following slides see attached document.

Answer 1

Slide 1: Managed Future (MF)

1. (pros) Weak correlation to traditional asset classes, which provides portfolio diversification across different business cycle
2. (pros) MF is typically highly liquid
3. (pros) Taking more systematic and quantitative approaches
4. (cons) Crowding and execution slippage
5. (cons) High leverage is embedded in futures contracts
6. (cons) Relative higher volatility and more cyclical than other hedge fund strategies

Slide 2: Equity Market Neutral (EMN)

1. (pros) High levels of diversification and liquidity, lower standard deviation of return
2. (pros) Especially attractive during periods of market vulnerability and weakness.
3. (cons) EMN managers usually apply higher levels of leverage, typically do not meet regulatory leverage limits for mutual fund vehicles.

Slide 3: MF

1. Return is typically positive skewed in periods of market stress --> benefit :)
2. Return tends to be more stable than Global Macro
3. Higher market risk than other hedge fund strategies

Slide 4: EMN

1. Market risk is hedged away, and many other risk factors (e.g., sector) are typically constrained
2. Main source of return is in security selection, with market timing being of secondary importance
3. Return could be negative skewed in distressed market