Hedge Funds: Investment Strategies to Risk Management

About Course

Introduction

This course provides a detailed exploration of hedge funds, mutual funds, and private equity, equipping students with the knowledge to manage these financial instruments effectively. From understanding fund structures and strategies to mastering accounting principles and risk management, this course is tailored for finance professionals, students, and anyone looking to dive deep into fund management.

Section 1: Managing Hedge, Mutual, and Private Equity (PE) Funds

This section introduces the fundamentals of hedge funds, mutual funds, and private equity. Students will explore investment strategies, asset allocation techniques, and performance evaluation metrics. The section concludes with a focus on private equity, examining venture capital, buyouts, and leveraged loans.

Section 2: Hedge Fund Structures and Operations

Dive into the intricate structures and operations of hedge funds. Topics include fund benefits, risks, fee structures, and equalization techniques. Practical examples illuminate the mechanics of capital accounts and series accounting, preparing students to navigate operational complexities.

Section 3: Accounting for Derivatives in Hedge Funds

This section demystifies accounting for derivatives, covering financial instruments, hedging techniques, and reporting standards such as SFAS No. 133. Students will learn through real-world examples and hands-on analysis of balance sheets, derivative transactions, and cash flow hedging.

Section 4: Profit and Loss Analysis

Here, students gain a comprehensive understanding of profit and loss (PnL) analysis in hedge funds. The section delves into master-feeder structures, NAV calculations, performance fees, and reconciliation techniques. Asset class comparisons, trading strategies, and PnL statements provide a holistic view of fund profitability.

Section 5: Fundamentals of Fund Accounting

This section provides a foundational understanding of fund accounting, including fund structures, strategies, and accounting principles. Students will explore topics like NAV components, management fees, subscription processes, KYC requirements, and the golden rules of accounting.

Section 6: Hedge Fund Strategies and Risk Management

This section focuses on hedge fund strategies such as market-neutral, event-driven, and global macro strategies. It also addresses risk management techniques, including VaR calculations, stress testing, and sensitivity analysis. Case studies on LTCM, Bridgewater, and Soros Fund illustrate lessons in risk and strategy execution.

Conclusion

By the end of this course, students will have a comprehensive understanding of hedge fund, mutual fund, and private equity management. Equipped with theoretical knowledge and practical insights, they will be ready to excel in fund management, risk analysis, and strategic decision-making.

What Will You Learn?

Fundamentals of hedge fund, mutual fund, and private equity management.
Advanced strategies for asset allocation and risk management.
Key accounting principles, including derivatives and fund accounting.
Real-world applications through case studies and hands-on exercises.
Insights into profit and loss analysis, NAV calculation, and regulatory compliance.

Material Includes

32.5 hours on-demand video
6 downloadable resources

Course Curriculum

Hedge Funds vs Mutual Funds vs Private Equity (PE) Funds

Introduction to Hedge Fund and Mutual Fund
Investments in Hedge Funds
Classification of Hedge Fund Strategy
Evaluating Hedge Fund Program
Asset Allocation and Performance
Concept of Private Equity
Example on Private Equity
Learning Venture Capital and Buyouts
Private Equity Liquid Alternatives
Growth of Leveraged Loans

Hedge Funds Structure and Operations

Introduction to Hedge Funds
Benefits and Risk of Hedge Funds
Fess and Remunerations if Hedge Fund
Series Accounting in Hedge Funds
Series Accounting in Hedge Funds Continues
Equalization and Concept Free Ride
Example of Equalization
Example of Equalization Continues
Onshore-Funds Capital Accounts
Conclusion

Accounting for Derivatives in Hedge Funds

Introduction to Accounting Derivatives in Hedge Funds
Financial Instrument
Traditional Financial Instrument
Derivatives Financial Instrument
Derivatives Financial Instrument Example
Derivatives using Hedging
Fair value Hedging
Fair value Hedging Continues
Cash Flow Hedge
Cash Flow Hedge Example
Other Reporting Issue
Disclosure Provisions
Summary of SFAS no 133
Comprehensive Hedge Accounting
Example 1
H Company Balance Sheet
Derivative Transaction
Bonds Payable Account
Example 2
Interest Expense Account
Example 3
Fair Value Change in Fair Value Gain
Cash Account to Interest Account
Cash Account to Interest Account Continues
Initial Forecast
Revenue Transaction
Conclusion

Profit and Loss Analysis

Introduction to Profit and Loss Analysis
Hedge Funds Overview
What is Hedge Fund
Hedge Funds Business
Master Feeder Structure
Month End Nav and Investors
Different Asset Classes
Difference in Asset Classes
Advantages and Disadvantages
Performance Fees and Management Fees
Accrued Expense and Income
Non Trading Accrual-Performance Fees
Realized and Unrealized PNL
Fund Admin
Dividend and Commission
Pricing
Pricing Continue
Daily PnL Rec
Recon Compare
Bank Debt
Bonds
Equity
Equity Swap
Swaption
CDS
OTC Options
Profit and Loss Statement
Conclusion to Profit and Loss

Fundamentals of Fund Accounting

Introduction to Fund Accounting
Introduction to Fund Accounting Continue
Fund Structure and Strategy
Types of Fund
Hedge Funds
Structure of Funds
Structure of Funds Continue
More on Structure of Funds
Hedge Funds Strategies
Convertible Arbitrage
Directional Strategy
Opportunistic-Events Driven Strategy
Quantitative Strategy
Components of FA
Example of Statement of Asset
Introduction to Principles
Scope of Accounting
Accounting Equation
Types of Accounts
Golden Rules in Accounting
Scope of Services
Subscription
KYC
Scope of Fund Accounting
Scope of Fund Accounting Continue
Allocation of Master Feeder
Overview of FA
Overview of FA Continue
More on Overview of FA
Components of NAV
Components of NAV Final Position
Significant Accounting Policies
Investment Valuation
Management and Incentive Fees
Calculation of Management Fees
Calculation of Management Fees Continue
Types of Management Fees
High Water Mark
Hurdles Rate
Types of Hurdles Rate
Types of Hurdles Rate Continue
Index Benchmarking
Equalization
Clawback Syndrome
Major Advantage of Series Method
Equalisation Methods
Steps to Prepare Financial Statement
Accounting Policies
Guidelines of GAAP
Regulatory Reporting Platform
Emerging Regulatory Environment
Applicability
Example Part 1
Example Part 2
Example Part 3
Example Part 4

Hedge Fund Strategies and Risk Management

Introduction to Hedge Funds
Definition of Hedge Funds
History of Hedge Funds
History of Hedge Funds Continues
Key Feature
Absolute Returns
Advantages and Disadvantages
Fee Structure
Legislation
Legislation Continues
Current Trends
More on Current Trends
Top Hedge Fund 2015
Hedge fund vs Mutual Fund
Content of HF Strategies
Introduction on HF Strategies
Leverage Of HF Strategies
Most Leveraged Hedge Fund 2015
Case Study – LTCM
Long Only
Short Only
Equity Long Short
Market Neutral
Chart Title
Short Bias
Long Bias
Variable Bias
Example Part 1
Example Part 2
Example Part 3
Introduction to Other Strategies
Emerging Markets
Features of Emerging Markets
Regional Performance
Multi Strategy
Multi Strategy Risk
Managed Future Trading CTA
Advantages and Disadvantages of CTA
Credit Strategy
Event Driven Strategy
Merger and Risk Involved
Event Driven Strategy Examples
Bloomberg Opposite Scenario
Global Macro Strategy
Global Macro Strategy Continues
Funds of Hedge Funds
Introduction to Performance Analysis
High Water Mark Calculation
Traditional Performance Measures
CAPM
Sharpe Ratio
Sortino Ratio
Treynor Ratio and Information Ratio
Benchmark Analysis
Quartile Chart
Calmer Ratio
Time Series Analysis
Schneeweis and Spurgin
Style Analysis
Fund and Hsieh
Software Available
Introduction to Concept of Leverage in Hedge funds
Measuring Leverage
Measuring Leverage Strategy
How Hedge Fund obtain Leverage
HF Leverage – What Can Go Wrong
What Can Go Wrong Continues
How Much Leverage is Important
Introduction to Accounting and Taxation
Structure of Hedge Funds
Carried Interest
Carried Interest Continue
Bermuda
Offshore Structure
Benefits Offshore Funds
Master Feeder Structure
US Reporting Requirements
De Minimis Rule
Accounting
Accounting Entries
Accounting Entries Continues
Example of Interest Rate
Understand Cash Flow Hedging
NAV Calculation
More on NAV Calculation
Introduction to Risk Management
Risk Exposure
Risk Exposure Continues
Measure of Risk
Standard Deviation
Value at Risk
VaR Historical Simulation
Calculating Value at Risk
Var Covar Matrix
Var Covar Matrix Continue
Downside Capture
Drawdown
Stress Testing
Sensitivity Analysis
Risk Management Software
Case Study – LTCM
Case Study – LTCM Continue
Risk Management Lesson – LTCM
Risk Management Lesson – LTCM Continue
Introduction to Case Studies
Understand Bridge Water Hedge Fund
Tiger Management
Amaranth Advisers
Amaranth Advisers Continues
LTCM
LTCM’s Portfolio
LTCM’s Portfolio Continue
Soros Fund
Low Interest Rate and High Inflation
Summary