FINC3022 Lecture 1: FINC3022-notes
Document Summary
Alternative assets are those that would not be held in a typical investment portfolio. Characteristics of alternative assets: (1) illiquid in nature, (2) difficult to value, (3) long-term investments. Alternative assets should yield high returns (risk/return trade-off) Alternative assets should have low correlations with traditional assets (form of diversification) May consider real estate an alternative asset craig doesn"t think so because there are many real estate trusts and real estate is not necessarily a long-term investment, and is often not that hard to sell off. Managed funds are the main source of capital for professionally managed alternative assets. The two main decisions relating to the investment strategy of a managed fund are asset allocation and stock selection. Individual funds can be grouped into three main types: (1) superannuation funds, (2) life insurance, (3) unit trusts: asset allocation: how funds are allocated to asset classes, stock selection: how funds are allocated within asset classes.
