In this episode of our ongoing series on the top hedge fund books, we take a look at six books that are directly about hedge funds – and mention them in the title. These are all pitched at the educational end of the market, so if you’re looking for some light reading, you won’t find any here, but you what you will find is a goldmine of in-depth information to help you to find out more about how the hedge fund industry operates.
This is a comprehensive reference book for both investors and fund/portfolio managers. Now in its third edition, the Handbook of Hedge Funds adds a wealth of new material to previous versions, including tips on portfolio construction, new case studies and trade examples, up-to-date regulatory information, discussions of hedge fund indices and databases, and detailed analyses of investment strategies,
Hedge Funds: An Analytic Perspective
Andrew Lo (Princeton University Press)
The largely unregulated, secretive world of hedge funds makes them harder to assess from an investment perspective, and this is a shortcoming that respected financial economist Andrew Lo attempts to address in this book. In Hedge Funds, he provides a systematic framework for managing hedge fund investments. Because the risk and return characteristics of hedge funds are very different to those of traditional investments, they require different tools for analysing their dynamics, and this is what Lo provides in this book. These tools include measures of linear and nonlinear risk models that capture alternative betas, integrated investment processes for alternative investments, illiquidity exposure and performance smoothing, and econometric models of hedge fund failure rates. The book finishes with a case study covering quantitative equity strategies in August 2007, placing a spotlight on the risks to the financial system that are imposed on it by the hedge fund industry.
Evaluating Hedge Fund Performance
Vinh Tran (Wiley Finance)
In Evaluating Hedge Fund Performance, author Dr. Vinh Q. Tran provides gives readers a guide to putting together an effective hedge fund portfolio, with their own knowledge level a prime determinant. It covers some of the most important issues related to hedge funds, including how to evaluate funds and pick winners. It differs from many similar books by providing clear guidance on how to manage the risk attached to hedge funds, providing methodologies for evaluating and monitoring hedge funds, backed up by interviews with and data from industry experts.
Intelligent Hedge Fund Investing
Barry Schachter (Risk)
Intelligent Hedge Fund Investing is a reference book that covers a wide spectrum of topics related to hedge funds, including risk management, investing, and portfolio allocation. It also provides in-depth analysis on topics such as dynamic investment strategies, illiquidity, and VaR estimation, and explains some of the major differences between hedge funds and other investment vehicles. With this book, readers can gain a practical insight into the methods for analysing and evaluating hedge fund investments and make better decisions in terms of how they allocate risk.
John. M. Longo (World Scientific)
Although Hedge Fund Alpha may be of interest to investors, it is aimed more at those that work within the industry, focusing on generating and understanding investment performance. It takes a particularly close look at understanding the returns from areas that are likely to provide rapid growth, particularly the emerging markets of the BRIC countries (Brazil, Russia, India and China). For anyone interested in learning about hedge funds, and in particular where the industry looks to be headed in the coming years, this is an essential read.
Cathleen Rittereiser and Lawrence Kochard (Wiley)
The financial crisis of 2008 was not kind to hedge funds, with many suffering huge losses and being apportioned some of the blame for the crisis. Ever since, hedge funds have remained in the sights of regulators, investors, and the media. This is mainly due to the impression that they are all risky investments for the super-rich run by irresponsible day traders, when in fact they are merely an investment class designed to reduce risk and generate returns in any market.
However, investing in hedge funds requires quite a lot in the way of knowledge, understanding, skill, access, and experience. Through a series of revealing interviews Hedge Fund Investors tells the stories of successful hedge fund investors and the challenges and rewards they have experienced, as well as the strategies, advice, and philosophies they have to offer. While it is primarily aimed at investors, it may also be worth reading for hedge fund professionals who want to gain a better understanding of their clients.
I am a writer based in London, specialising in finance, trading, investment, and forex. Aside from the articles and content I write for IntelligentHQ, I also write for euroinvestor.com, and I have also written educational trading and investment guides for various websites including tradingquarter.com. Before specialising in finance, I worked as a writer for various digital marketing firms, specialising in online SEO-friendly content. I grew up in Aberdeen, Scotland, and I have an MA in English Literature from the University of Glasgow and I am a lead musician in a band. You can find me on twitter @pmilne100.