Hedge Funds: Myths and Limits

Rating:
Summary: In-Depth and Comprehensive
Review: Lhabitant's "Hedge Funds: Myths and Limits" covers its subject from legal and tax aspects to quantitative and statistical finance. More than this, in line with the subtitle, the book debunks the myths and outlines the limits for the hedge fund industry. The critique delivered is however balanced, and the book manages to maintain a constructive as well as instructive tone. Different material is separated in a way that make the book a good read for both people outside the finance industry and quantitative analysts. Look for more on this at [webpage]

Rating:
Summary: Excellent !!!
Review: Monsieur Lhabitant highly succeeded in writing a book in a very readable style with a strong academic framework for (especially institutional) investors and professionals.

HEDGE FUND OVERVIEW
history, legal environment and structures, operational and organisational structures

HEDGE FUND STRATEGIES
tools used by hedge funds, long/short strategies, arbitrage and relative value strategies, event driven strategies, directional strategies, hedge fund indices, hedge fund performance.

HEDGE FUND INVESTING
asset allocation, hedge fund selection, fund of funds and metadiversification, capital-guaranteed products, advanced topics: inside the black box.

appendix: the statistics of hedge funds

Bravo !!!

Rating:
Summary: Good comprehensive guide to how hedge funds work
Review: More quantitative than most other books on hedge funds, this volume provides a comprehensive look at the hottest investment vehicles at the moment. Starting with the history, the book discusses the structure, operations, strategies, and performance measures of hedge funds. Unlike books written by the president of HFR, which are purely marketing turd, this book has substance and can be kept as a solid reference. Minor problems include a few critical typos, some irrevelent charts, and choppy English in a few places -- and a high price. But these do not distract from the value this book, and I recommend it to all interested in the topic.

Rating:
Summary: Good comprehensive guide to how hedge funds work
Review: More quantitative than most other books on hedge funds, this volume provides a comprehensive look at the hottest investment vehicles at the moment. Starting with the history, the book discusses the structure, operations, strategies, and performance measures of hedge funds. Unlike books written by the president of HFR, which are purely marketing turd, this book has substance and can be kept as a solid reference. Minor problems include a few critical typos, some irrevelent charts, and choppy English in a few places -- and a high price. But these do not distract from the value this book, and I recommend it to all interested in the topic.

Rating:
Summary: An excellent text book for academics and govt officers but
Review: not for investors nor traders.

As a trading book fan, CFA and professional trader, I must say this is the most informative, knowledgeable, well-researched book on hedge funds I had ever read. It could be a bible for anyone working in a bank or government institutions who need to monitor risk and legal issues concerning the very sophisticated hedge fund operations. This may be attributed to the very strong academic background of the author. However, it certainly goes far beyond the need and understanding of the general investment public or even professional traders like me whose primary objective may just be to profit, and profit. Therefore the value of it depends much on who the reader is and what he wants. No matter what, the quality of the book and the sincerity of the author can be much appreciated.



Rating:
Summary: In-Depth and Comprehensive
Review: This book is a compendium of information on hedge funds starting with an instructional and basic introduction for both quantitative and qualitative investors. The first part explains in detail the basics, the legal environment, operational, and organizational structures of hedge funds. It also examines custodial and administration policies in various jurisdictions in European countries where some investment advisors of hedge funds are located. The chosen European setting is largely due to the explosion of hedge funds and hedge fund interest, which is the main engine of change in the equity finance landscape currently undergoing a revolution. The author dismisses several misinterpretations of the way hedge funds operate and contributes an impartial and comprehensive blend of both theoretical and practical underpinnings of global markets.
The second part goes into detail regarding the fundamental concepts needed to understand hedge fund strategies along with their potential positive and negative contributions to investment portfolios. It also thoroughly examines the statistical biases in hedge fund databases and indices. At the same time each chapter is supplemented with real world examples involving corporations and the use of hedge fund strategies. An overview of the major index providers is an added feature to inform investors how each database vendor has classified the hedge fund strategies and their different methods are examined. The various hedge fund strategies are presented in three chapters and an entire chapter is devoted to directional strategies such as global macro, sector, short sellers and managed futures.
In the third and final part, the author highlights the important aspects of including hedge funds in traditional portfolios, database differences, non-transparency, due diligence, selecting and monitoring hedge funds. The author clearly outlines the benefits for investors using asset allocation and how it can be applied towards hedge funds. The second to last chapter of the text educates the reader on how he can properly navigate, identify and select hedge fund managers through the maze of almost 6,000 hedge funds. Of note, the chapter on funds of hedge funds describes the benefits of investing in these products, what the author calls "meta diversification" and discusses portfolio optimization along with what the future holds.
Capital guaranteed products are addressed in one of the final chapters and the advantages of these new structured products often referred to as capital protected notes are explained. These products permit investors to get back a specified portion of capital they fully invested, enabling them to maximize their positions in hedge funds. Due to the recent creation of capital guaranteed products is sure to make the hedge fund industry grow even at a faster pace and it seems that institutional investors have bought this new idea. These new products will allow for equity style returns with less volatility and the security of cash.
The final chapter deals with multifactor models, Sharpe style analysis and Value at risk.
The author concludes with a chapter on advanced quantitative topics and follows this with an appendix on returns and risk statistics of hedge funds. This book brings the reader completely up to date with the latest developments in the hedge fund industry. The elaborate bibliography and over 60 websites found at the end of the book is the icing on the cake.
This gem of a book can serve as a handbook and a practical guide to the hedge fund industry. LHabitant has done a superb job and has provided all investors, portfolio managers, as well as professional financial advisers with a complete one stop hedge fund shopping text. It is the ultimate book about the hedge fund industry.

Rating:
Summary: THE HEDGE FUND BIBLE
Review: This book is a compendium of information on hedge funds starting with an instructional and basic introduction for both quantitative and qualitative investors. The first part explains in detail the basics, the legal environment, operational, and organizational structures of hedge funds. It also examines custodial and administration policies in various jurisdictions in European countries where some investment advisors of hedge funds are located. The chosen European setting is largely due to the explosion of hedge funds and hedge fund interest, which is the main engine of change in the equity finance landscape currently undergoing a revolution. The author dismisses several misinterpretations of the way hedge funds operate and contributes an impartial and comprehensive blend of both theoretical and practical underpinnings of global markets.
The second part goes into detail regarding the fundamental concepts needed to understand hedge fund strategies along with their potential positive and negative contributions to investment portfolios. It also thoroughly examines the statistical biases in hedge fund databases and indices. At the same time each chapter is supplemented with real world examples involving corporations and the use of hedge fund strategies. An overview of the major index providers is an added feature to inform investors how each database vendor has classified the hedge fund strategies and their different methods are examined. The various hedge fund strategies are presented in three chapters and an entire chapter is devoted to directional strategies such as global macro, sector, short sellers and managed futures.
In the third and final part, the author highlights the important aspects of including hedge funds in traditional portfolios, database differences, non-transparency, due diligence, selecting and monitoring hedge funds. The author clearly outlines the benefits for investors using asset allocation and how it can be applied towards hedge funds. The second to last chapter of the text educates the reader on how he can properly navigate, identify and select hedge fund managers through the maze of almost 6,000 hedge funds. Of note, the chapter on funds of hedge funds describes the benefits of investing in these products, what the author calls "meta diversification" and discusses portfolio optimization along with what the future holds.
Capital guaranteed products are addressed in one of the final chapters and the advantages of these new structured products often referred to as capital protected notes are explained. These products permit investors to get back a specified portion of capital they fully invested, enabling them to maximize their positions in hedge funds. Due to the recent creation of capital guaranteed products is sure to make the hedge fund industry grow even at a faster pace and it seems that institutional investors have bought this new idea. These new products will allow for equity style returns with less volatility and the security of cash.
The final chapter deals with multifactor models, Sharpe style analysis and Value at risk.
The author concludes with a chapter on advanced quantitative topics and follows this with an appendix on returns and risk statistics of hedge funds. This book brings the reader completely up to date with the latest developments in the hedge fund industry. The elaborate bibliography and over 60 websites found at the end of the book is the icing on the cake.
This gem of a book can serve as a handbook and a practical guide to the hedge fund industry. LHabitant has done a superb job and has provided all investors, portfolio managers, as well as professional financial advisers with a complete one stop hedge fund shopping text. It is the ultimate book about the hedge fund industry.

Rating:
Summary: Broad introduction
Review: This is a good introduction into the subject. Well researched. If you only buy two books on the topic, this should be one of them.