Skip to Main Content
Portfolio Management
book

Portfolio Management

by Scott D. Stewart, Christopher D. Piros, Jeffrey C. Heisler
March 2019
Beginner content levelBeginner
720 pages
24h 22m
English
Wiley
Content preview from Portfolio Management

CHAPTER 11Alternative Investment Classes

Chapter Outline

  1. 11.1 Introduction
  2. 11.2 Hedge Funds
  3. 11.3 Venture Capital and Private Equity
  4. 11.4 Real Estate
  5. 11.5 Commodities
  6. 11.6 Alternatives Manager Selection
  7. 11.7 Allocating Assets Including Alternatives
    1. Summary
    2. Problems
    3. Appendix: Sources for Return Series
    4. Endnotes

11.1 INTRODUCTION

Up until this chapter, the discussion has focused on managing portfolios of well-defined asset classes. Pricing data on equities, investment-grade bonds, and cash instruments in developed markets are readily available and not subject to significant pricing problems or survivorship bias. Passive investment in these asset classes is readily accomplished through separate accounts, mutual funds, or ETFs. This is not the case with alternative investment classes, which require a new approach to evaluating risk-return profiles. Note that we're careful to avoid the term alternative asset classes. As Erb and Harvey (2006) note, these investments are more like asset “strategies,” due to the general lack of effective passive alternatives or the impracticality of market capitalization–weighting schemes.

If alternatives offer an opportunity to expand the efficient investment set, then merely investing in the familiar assets—stocks, bonds, and cash—will be suboptimal. Commodities, real estate, and new business ventures are all considered alternative investments. Hedge funds, which frequently invest in publicly traded stocks and bonds, are also considered alternative ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Portfolio Management

Portfolio Management

John Wyzalek, Ginger Levin, PMP, PgMP
Equity Valuation and Portfolio Management

Equity Valuation and Portfolio Management

Frank J. Fabozzi, Harry M. Markowitz

Publisher Resources

ISBN: 9781119397410Purchase book