By David P. Belmont
The final consultant to facing hedge fund chance in a post-Great Recession world
Hedge money were confronted with various new demanding situations due to the ongoing monetary concern. The simultaneous cave in of significant monetary associations that have been their buying and selling counterparties and repair companies, primary and systemic raises in marketplace volatility and illiquidity, and unrelenting calls for from traders to redeem their hedge fund investments have conspired to make the weather for hedge money super uncomfortable. hence, many money have failed or been compelled to shut as a result of bad functionality. Managing Hedge Fund threat and Financing: Adapting to a brand new Era brings jointly the numerous classes discovered from the hot crisis.
Advising hedge fund managers and CFOs on tips to deal with the danger in their funding recommendations and constitution relationships to most sensible insulate their businesses and traders from the disasters of economic counterparties, the booklet seems to be intimately on the numerous methodologies for coping with hedge fund industry, credits, and operational hazards counting on the hedge fund's funding procedure. additionally protecting top perform ISDA, leading Brokerage, rate and Margin Lock Up, and together with suggestions for dedicated Facility lending contracts, the booklet contains every little thing you must understand to benefit from the occasions of the previous to notify your destiny hedge fund dealings.
- Shows easy methods to deal with hedge fund probability during the program of economic possibility modelling and dimension innovations in addition to the structuring of monetary relationships with traders, regulators, collectors, and buying and selling counterparties
- Written by means of a world finance specialist, David Belmont, who labored heavily with hedge fund consumers through the difficulty and skilled first hand what works
- Explains find out how to take advantage of the monetary crisis
within the wake of the monetary hindrance there were demands extra stringent administration of hedge fund chance, and this well timed ebook deals complete directions for CFOs trying to verify world-class degrees of company governance.
Chapter 1 the fast and the lifeless: classes discovered (pages 1–31):
Chapter 2 An built-in method of Hedge Fund probability administration (pages 33–82):
Chapter three A Survey of Hedge Fund innovations and dangers (pages 83–142):
Chapter four research of the Risk/Return Profile of Hedge Fund ideas (pages 143–238):
Chapter five handling investment hazard (pages 239–298):
Chapter 6 handling Counterparty danger (pages 299–313):
Chapter 7 chance administration for Hedge Fund traders (pages 315–344):
Chapter eight end (pages 345–348):
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Extra info for Managing Hedge Fund Risk and Financing: Adapting to a New Era
Consequently, each investor has a different ability to absorb losses before needing to stop losses by liquidating their investment. In addition, each investor has a different need for liquidity. In the crisis, almost all asset classes lost value and investors that relied on their investments to fund spending found that they had to choose which investments to liquidate in order to fund those expenses. Often it was not the investments that had lost the most that were liquidated ﬁrst but those that at least remained liquid that were sold.
This is one area where the judgment of the risk manager and hedge fund manager are critical. Hedge fund managers must recognize that a single VaR number is not sufﬁcient to capture all risks faced by the fund (that is, they do not describe the full potential loss distribution) and that successful risk management requires the risk management team to analyze both the sensitivity of the VaR to potential market conditions not represented by the VaR analysis and conduct stress and scenario analysis that offsets the weaknesses of the VaR calculations and contributes to the investment decision process.
In back-testing, it is expected that the portfolio will lose more than the VaR from time to time. For example, a 99 percent one-day VaR should be exceeded on one day in every 100 trading days on average. When the actual changes in the value of the portfolio exceed VaR, the hedge fund manager must determine the source of the discrepancy (that is, whether the VaR measure is ﬂawed or whether this loss is simply one which was expected given the conﬁdence level employed). Other potential sources of deviations include: 1.