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Alternative Investments: A Primer for Investment Professionals

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Alternative Investments: A Primer for Investment Professionals provides an overview of alternative investments for institutional asset allocators and other overseers of portfolios containing both traditional and alternative assets. It is designed for those with substantial experience regarding traditional investments in stocks and bonds but limited familiarity regarding alternative assets, alternative strategies, and alternative portfolio management.

The primer categorizes alternative assets into four groups: hedge funds, real assets, private equity, and structured products/derivatives. Real assets include vacant land, farmland, timber, infrastructure, intellectual property, commodities, and private real estate. For each group, the primer provides essential information about the characteristics, challenges, and purposes of these institutional-quality alternative assets in the context of a well-diversified institutional portfolio.

Other topics addressed by this primer include tail risk, due diligence of the investment process and operations, measurement and management of risks and returns, setting return expectations, and portfolio construction. The primer concludes with a chapter on the case for investing in alternatives.

About the Author(s)

Donald R. Chambers
Keith Black
Keith Black CFA

Keith Black, CFA, is managing director of curriculum and exams at the CAIA Association. He has over 25 years of financial market experience, serving approximately half that time as an academic and half as a trader and consultant to institutional investors. Previously, Dr. Black worked at Ennis Knupp + Associates, where he advised foundations, endowments, and pension funds on their asset allocation and manager selection strategies in hedge funds, commodities, and managed futures. His prior experience includes commodity derivatives trading, stock options research and CBOE floor trading, and building quantitative stock selection models for mutual funds and hedge funds. Dr. Black has also served as an assistant professor and senior lecturer at the Illinois Institute of Technology. He contributes regularly to the CFA Digest and has published articles in the Journal of Wealth Management, the Journal of Trading, the Journal of Investing, and the Journal of Alternatives Investments. Dr. Black is the author of Managing a Hedge Fund and co-author of the 2012 and 2015/2016 second and third editions of the CAIA Level I and Level II textbooks. He was named to Institutional Investor magazine’s list of Rising Stars of Hedge Funds. Dr. Black earned a BA from Whittier College, an MBA from Carnegie Mellon University, and a PhD from the Illinois Institute of Technology.

Nelson J. Lacey