Prisma conducts ongoing research and analysis of key trends and issues shaping today’s landscape for alternative investments. Our research aims to explore topics of interest in the hedge fund community and provide investors with clarity around commonly faced challenges and issues.
Obama’s Economic Inheritance
Gavyn Davies
Barack Obama won the US Presidency because of the financial and economic collapse of 2008. The world now looks to him to restore confidence in an economic system that is under unprecedented strain. His election represents a good moment to survey the state of the world economy, and the risks it faces in the period ahead.
A Closer Look at Hedge Fund Beta
Prisma Capital Partners
Unlike the long-only world, where managers typically maintain a consistent beta, hedge fund betas are notoriously erratic. The added flexibility that hedge fund managers have to apply leverage, take both long and short positions and invest across multiple asset classes, leads to ever-changing beta measurements.
How Many Fund Managers Does a Fund of Funds Need?
Kartik Patel
Investing via fund-of-funds gives investors exposure to a diversified set of hedge fund managers following different strategies (like long/short equity, convertible arbitrage etc.). Here we investigate the appropriate number of hedge funds in a portfolio from the perspective of an institutional diversified fund-of-funds investment management mandate.
A Simple Model for the Expected Premium for Hedge Fund Lockups
Emanuel Derman, Journal of Investment Management, Vol. 5, No. 3
A lockup deprives an investor of the opportunity to redeem an investment in poorly performing funds and reinvest the proceeds in successful ones. The value of that lost future opportunity is the expected premium for committing to the lockup.
Comment on Recent Events in Credit Markets
Prisma Capital Partners
Spreads on all types of risky credit remain at historically low levels. If there is a significant widening of credit spreads across the board, this will have a dramatic impact on a wide range of market participants
Are Funds of Funds Simply Multi-Strategy Managers with Extra Fees?
Girish Reddy, Peter Brady, Kartik Patel, The Journal of Alternative Investments
A fund of funds can potentially offer a number of benefits that are not provided by multi-strategy managers. In addition, the differential in fees between funds of funds and multi-managers is smaller than most investors realize, even when we consider the impact of fee netting.