Introduction to Fund Management

Course Overview

This two day interactive programme is designed to offer an insight into the working practices of today’s Fund Managers – the Buyside of the industry. Emphasis will be on the practical, not theoretical.

The content will cover how the Managers invest across the traditional investable universe (Bonds, Equities & related Derivatives), as well as how they deal with the inherent everyday risks in the markets & how to incorporate alternative investments like Hedge Funds into mainstream Portfolios.

Course Content

Day One:

Modern Portfolio Theory and Efficient Markets as applied to today’s environment

• Efficient Markets – Are they? Do we live in a ‘Normal’ world?
• Behavioural Finance & its impact on current thinking
• The Capital Asset Pricing Model and Efficient Frontiers
• Betas and the search for Alpha
• What should we expect from Equities? The lessons of history
• What is the correct Equity Risk Premium now?

Case Study – Beta at work in practice

Active Equity Portfolio Management – Valuation screens

• Which valuation methodology to choose? It depends on the sector
• Price Earnings Ratios & PEGs
• Dividend Yields – Equities as a source of income
• Asset Backed valuation
• Enterprise Values & EBITDA

Case Study – A walk through a New Issue’s Valuation criteria

Passive Portfolio Management using Exchange Traded Funds

• ETFs & traditional Index Funds compared
• Understanding ETFs, the replication mechanism
• Primary (Redemption, Creation process) & Secondary markets
• Core vs Satellite investing
• ETF Variations on a theme – Inverse, Leveraged, Thematic, Active

Bond Portfolio Management styles

• Interest Rate sensitivity (Modified Duration)
• Actively or passively Managed, Sensitivity to Credit Risk
• Maturity targeting, Gross Redemption Yield
• Interest Rate anticipation
• Yield Curve strategies
• Yield/Credit spread strategies

Case Study – Comparing Sovereign Yield Spreads across the Eurozone

Day Two:

Portfolio Construction in practice

• How have Wealth Managers’ invested their Clients’ wealth to date?
• Investments of ‘passion’
• Changing Asset allocation strategies in today’s Markets
• Diversification vs Correlation
• Client profiles and model portfolios

Case Study – Putting together a Portfolio for a HNWI in practice

Using Derivatives in Portfolio Management

• Which products do the Portfolio Managers mainly use & why?
• Index Futures – Hedging, Margin requirements
• Options Trading Strategies for Equity Fund Managers
• Contracts for Difference
• Credit Default Swaps for Bond Fund Managers

Case Study – CDS pricing in practice

Risk Measurement and Management across the Investable Universe

• Volatility – Statistical probability and dispersion of returns
• Fat Tails in Finance & Black Swans explained

Case Study – Volatility in practice across the Mutual Fund Universe

• Sharpe Ratios – Risk adjusted performance measurement
• Portfolio Optimisation and rebalancing (Excel demonstration)
• Value at Risk

Using Alternative Investments in the Portfolio

• Hedge Funds defined
• Rationale for Hedge Funds in an Investors’ Portfolio. Is it still there?
• The non-correlated Asset Class, Survivorship Bias, Drawdown
• Leverage, Risk and Transparency
• Institutionalisation of Hedge Funds, Index Providers – Benchmark Risk 

Case Study – How do investors choose their Hedge Fund Managers?

Delivering this course in-house for you to a number of participants could be very cost effective. Please call us on 020 7387 4484 to discuss this further.

If you have any questions about this seminar please write to us at post@redcliffetraining.co.uk.