Active Alpha: A Portfolio Approach to Selecting and Managing Alternative Investments

With significant assets currently committed to alternative investments, it’s clear to see that serious investors–both institutional and high-net-worth individuals–are extremely interested in adding these types of investments to their portfolios. But in order to properly integrate today’s alternative investments into a portfolio of traditional asset classes, it is prudent to follow a portfolio construction methodology that includes factor analysis.

Nobody understands this better than author Alan Dorsey. Over the course of his successful financial career, Dorsey has skillfully refined his approach to selecting and managing alternative investments. And now, with Active Alpha, he shares these essential experiences.

Divided into two comprehensive parts, Active Alpha is filled with cutting-edge material mixed with sage advice on alternative investment trends in the world of portfolio management. In Part One, you’ll become familiar with organizational and implementation issues–such as governance and gaining access to the best funds–that arise when dealing with alternative investments. Along the way, a variety of alternative investment strategies are introduced, including hedge funds, private equity, real estate, currencies, commodities, timber, and oil and gas. Chapters that pertain to a specific type of alternative investment detail the basic attraction of each as well as the qualitative return drivers that tend to affect them. Approaches for each strategy are carefully presented, along with various tactics, substrategies, and forms of fund. Rounding out the discussion of each alternative investment are considerations for the construction of portfolios dedicated solely to each one.

Part Two of Active Alpha moves on to address the use of alternative investments in traditional portfolios. Important issues covered here include the migration of hedge funds into the realm of private equity, alternative investment cash flow and its implications for portfolio rebalancing, the use of leverage, and portable alpha techniques. Factor analysis is also closely evaluated through an in-depth discussion of the basic supporting methodologies and quantitative building blocks that underpin factor analysis when applied to investment management, and a quantitative illustration of factor analysis as applied to the major strategies for hedge funds, private equity, real estate, currencies, commodities, timber, and oil and gas.

Written in an engaging and informative style, Active Alpha shows how to analyze factors associated with alternative investments, identify true sources of Alpha, and create well-balanced portfolios with accurately measured risk exposures.

With significant assets currently committed to alternative investments, it’s clear to see that serious investors―both institutional and high-net-worth individuals―are extremely interested in adding these types of investments to their portfolios. But in order to properly integrate today’s alternative investments into a portfolio of traditional asset classes, it is prudent to follow a portfolio construction methodology that includes factor analysis.

Nobody understands this better than author Alan Dorsey. Over the course of his successful ­financial career, Dorsey has skillfully refined his approach to selecting and managing alternative investments. And now, with Active Alpha, he shares these essential experiences.

Divided into two comprehensive parts, Active Alpha is filled with cutting-edge material mixed with sage advice on alternative investment trends in the world of portfolio management. In Part One, you’ll become familiar with organizational and implementation issues―such as governance and gaining access to the best funds―that arise when dealing with alternative investments. Along the way, a variety of alternative investment strategies are introduced, including hedge funds, private equity, real estate, currencies, commodities, timber, and oil and gas. Chapters that pertain to a specific type of alternative investment detail the basic attraction of each as well as the qualitative return drivers that tend to affect them. Approaches for each strategy are carefully presented, along with various tactics, substrategies, and forms of fund. Rounding out the discussion of each alternative investment are considerations for the construction of portfolios dedicated solely to each one.

Part Two of Active Alpha moves on to address the use of alternative investments in traditional ­portfolios. Important issues covered here include the migration of hedge funds into the realm of private equity, alternative investment cash flow and its implications for portfolio rebalancing, the use of leverage, and portable alpha techniques. Factor analysis is also closely evaluated through an in-depth discussion of the basic supporting methodologies and quantitative building blocks that underpin factor analysis when applied to investment management, and a quantitative illustration of factor analysis as applied to the major strategies for hedge funds, private equity, real estate, ­currencies, commodities, timber, and oil and gas.

Written in an engaging and informative style, Active Alpha shows how to analyze factors associated with alternative investments, identify true sources of Alpha, and create well-balanced portfolios with accurately measured risk exposures.