Introduction to Hedge Funds

Key Learning Outcomes:
Attendees of this 1-day course will gain an understanding of:

• Understand what hedge funds are
• Key players and their roles
• Understanding of different strategies
• Appreciation of hedge fund toolkit
• Lessons from hedge fund failures
• Why invest in hedge funds
• Hedge fund challenges
• An opportunity to execute hedge fund strategies and techniques on a live trading platform

Course Outline

Topics
Introduction and Welcome
Attendee icebreaker session
The big picture – What exactly is a hedge fund?

• What is hedging?
• Common characteristics of hedge funds
• Not all hedge funds hedge!
• Is it even an asset class?

Alternative asset Classes – What are they? Where do HF fit in?

• A brief look at Alternative Asset Classes (private equity, real estate, infrastructure and hedge funds) vs Traditional Asset Classes– why do investors like alternatives?

Hedge Fund Tools

• Leverage – financial vs synthetic
• Short Selling
• Derivatives

Back to private equity – the market landscape

• Equity strategies
• Macro
• Managed futures/CTA
• Event driven strategies
• Relative value strategies
• Credit strategies
• Multi-strategy, niche strategies

Run your own Hedge Fund

• Team challenge - Hedge fund - trading session 1

Attendees will to put their learnings into practice is by running their own hedge fund for the day, whilst competing against the other teams. This will be in a safe environment where participants will manage a virtual account of £10m.


Participants will have access to a live market platform and will be able to put a number of hedge fund strategies into practice by trading various instruments (equities, commodities, bonds and foreign exchange) in a real time environment. There will be up to 4 trading sessions interspersed throughout the training day. Participants will have to present session results and explain their rationale for their decisions.


The learning from this team challenge include: applications of HF strategies, use of derivatives, long/short selling, margin, cash/asset management, risk management, arbitrage and aspects of behavioural finance.


A look at some market data
Hedge fund market landscape

• The hedge fund eco system
• Key players and their roles
• Hedge fund managers
• Investors
• Prime brokers
• Fund of funds
• Service providers

Team challenge - Hedge fund - trading session 2
Hedge fund disasters

• LTCM
• Credit crisis – subprime
• Lessons and effects

Terms & conditions

• Management fees
• Performance fees
• Hurdle rates
• Lockup periods
• Redemption

Team challenge - Hedge fund - trading session 3
Why invest in hedge funds?

• Some HF challenges
• Team challenge - Hedge fund - Final trading session
• Risk management
• VaR, stress testing, scenario analysis

Due diligence

• Manager selection
• What would you ask?

Final Q&A Session

• Summary review