hedge funds

Book Review – “Investment Performance Measurement – Evaluating and Presenting Results” by Philip Lawton and Todd Jankowski (editors)

Here’s the handbook for the professional investment manager or for those who want to have in their libraries a reference volume: “Investment Performance Measurement – Evaluating and Presenting Results” not only contains almost 1,000 pages of technical articles, but it is also nicely organized.
In a sense, “Investment Performance Measurement – Evaluating and Presenting Results” represents a complete reference for the CFA (“Chartered Financial Analyst”) who wants to keep in touch with some technical issues. The book contains 5 parts, which take you from the introductions to the portfolio and risk management theories to the latest developments in the field (part 5 is named “Global Investment Performance Standard”, a right adagio for the cross-continental savvy manager).
It is hard for me to start somewhere with this review – and this is because of the content richness. “Investment Performance Measurement – Evaluating and Presenting Results” contains lots of articles on investments performance, some of them very mathematical, others very behavioral and others … well, unusual.
A very mathematical chapter (yet a very interesting one) is called “On the Performance of the Hedge Funds”, which combines a mathematical approach with a risk methodology in order to give the reader a better view on how to approach a fund. It is not easy, since a hedge fund tries to balance actually the risks inherent in the portfolio with a need for strong and constant returns. The fact that few hedge funds manage to have a constant performance over the long term just lays the nature of the game. Yet, when you invest lots of money in such a vehicle, I think you should at least try to understand its composition and the formula to calculate the average returns on the fund (or the yield of it). But the authors of the article go beyond this – they actually run a regression to see if the various fees paid to the mangers have an impact on the performance. Guess what – yes they have an effect and it is quite substantial – for the rest of the details I will just let you read the article itself.Read More »Book Review – “Investment Performance Measurement – Evaluating and Presenting Results” by Philip Lawton and Todd Jankowski (editors)

IMF Reccomends Stronger Measures to Fight the Global Financial Crisis

imf-building-2The International Monetary Fund (IMF) has recently published a comprehensive report called “Global Financial Stability Report – Responding to the Financial Crisis and Measuring the Systemic Risk.”. The IMF paper covers the history of the recent global financial crisis, as well as the measures taken by the governments and the companies to fight against it.

The report analyzes why the financial institutions have all been hit so hard by the current financial crisis, from the pension funds to the life insurance companies. These institutions were impacted despite the fact that most of them took preventive measures to manage potential surges in the risks of their assets. The report also underlines that there is a strong retrenchment from foreign markets, which outpaces strongly the overall de-leveraging process. The sharp decline of the cross border funding actuall created the crisis in the emerging markets, whilst the re-financing needs of those markets are still very large (estimated by the IMF at $1.8 trillion in 2009). Read More »IMF Reccomends Stronger Measures to Fight the Global Financial Crisis