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Alternative Market Briefing

New research focuses on best practices for investing in alternatives

Wednesday, February 20, 2013

Bailey McCann, Opalesque New York: A new white paper from the Greenwich Roundtable outlines what they consider best practices for investing in hedge funds, and other alternative investments, along with some common mistakes to avoid. The research paper investigates how investors can avoid being victims of a fund that self-destructs. The Greenwich Roundtable is a leading not-for-profit research and educational organization comprised largely of institutional investors who invest in alternatives. The purpose of the Greenwich Roundtable is to discuss and provide current and cutting-edge information on non-traditional investing.

The paper is broken down into two sections. The first section is a compilation of case studies that takes a deep dive into hedge funds that have failed. Each case study details the background of each fund, what went wrong and the warning signs. The second section discusses the importance of understanding cycles in private markets, knowing when to invest and how initial due diligence and continued manager monitoring can help avoid common pitfalls.

On the hedge fund side, the paper offers 22 case studies of hedge funds and how they handled the 2008 and other crises. Researchers contend that many of the investors involved in these fund closures could have avoided losses had they been more proactive. Many of the reasons for closure outlined in the paper cover activities by managers that can be red flags such as excessive leverage, unreasonable volat......................

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