Mastering Alternative Investments
Worldwide, hedge funds and private equity partnerships control US$ 3 trillion of investments. Though this sum is still relatively small compared to the assets under management of traditional institutions such as mutual funds and pension funds, it is undeniable that the influence of these alternative assets classes far exceeds their relative size. No serious investor can afford to ignore alternative assets, especially in today’s turbulant investment environment.
Expanding investors’ risk-reward frontier
Alternative assets appeal to investors either because they deliver superior alpha, or because they help investors hedge beta risk. In other words, used successfully, they can expand an investor’s risk-reward trade-off frontier, and provide superior investment outcomes in an absolute sense, irrespective of overall market conditions. Some of the most successful institutional investors are early movers into the alternative assets space.
Alternatives poised to grow
It is our view that global asset allocation will bi-polarise in the coming decade. Market exposure – beta – will increasingly be obtained through inexpensive and perfected indexing technologies. Superior returns – alpha – will come from alternative investments. This means that alternative investments are poised for rapid growth to answer global investor demand.
Talent shortage will be a bottleneck
However, alternative investments are more complex than traditional assets and becoming increasingly so. The recent credit market turmoil demonstrates that used unwisely, alternative assets can add substantial risk to a portfolio without achieving the desired incremental return or diversification benefit. One bottleneck in alternative investments’ growth will be a talent shortfall, which creates opportunities for those who are prepared.
Recognising these key factors, INSEAD offers Mastering Alternative Investments (MAI), a three-day intensive programme on this asset class. Topics discussed will include (will not be limited to) hedge funds, private equity, structured products, and risk control and management. The goal is to provide participants a framework to analyse alternative investments, which is indispensable for understanding the role of alternatives in an investor’s overall portfolio.
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