Emerging markets and hedge funds – background An emerging market can be broadly defined as nations

Grove Street Advisors (“GSA”) is a leading fund-of-funds, focused on investing in “low risk” top-tier private equity funds that are not excessively large nor highly levered. GSA is faced with a number of strategic alternatives to help catalyze the firm’s next stage of growth. We propose that GSA expand globally and continue to build expertise in relatively underserved global PE markets such as China and India to help meet its objectives of satisfying customer needs, enhancing its international reputation, staying responsive to trends in private equity, and ultimately maximizing profitability.

Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance

Summary: As the Mexican Peso, financial markets hit record lows it has lead investors across the globe to hedge on emerging markets, which are nations that are in the process of rapid growth and industrialization. As it stands the peso is one of the currencies that has very few limitations on trading has been very attractive to investors looking to hedge bullish positions by going short or betting the peso will decline. A trade that has been quite popular amongst investor has been to buy Brazilian stocks and selling the peso due to the Brazilian currency controls. Although the

I have personally managed substantial portions of large emerging markets corporate debt funds in both absolute return and long only strategies and served on the investment committees overseeing the entire strategy, with a focus on high-yield and investment grade corporate credit, distressed debt, and hedging products such as CDS. I also served as co-head of risk and as the head of risk of management at my latest firm, developing both the analytical

If you’re a hedge fund investor, chances are you’ve had a lot of bad news lately. Despite investors reduced return expectations the hedge fund industry has experienced some difficulties over the past few years. Hedge funds investors have withdrawn their money out of poorly performing funds. As a result, some of these firms’ assets will decline to the point where they are no longer profitable. Others have had a significant drawdown which will materially impair their ability to raise capital for the next several years. While it is true that the hedge fund industry saw the most outflows in the first quarter of 2016 since the second quarter of 2009. Despite all the negative stories about the industry, including some recent

Shareholder activism refers to the active influence on corporate policy and practices through the use of ownership position1. Activism can be advocated by a single minority investor, or large institutional investors with majority stakes in the organization such as mutual funds and pension funds2. The history of shareholder activism can be traced back 80 years ago when a court decision sided with dissident shareholders and reinstated the special dividend that Henry Ford chose to cancel3. Shareholder activism in the United States continues to evolve, expand, and increase in influence since then. In the late 1980s, shareholder activism takes on a more aggressive paradigm through engagement in hostile takeovers and leveraged-buyouts to gain control of undervalued and underperforming companies3. In the 1990s, shareholder activism took on a less aggressive form of activism – favoring abstentions and withholding votes for essential proxy issues – to advocate operational, financial, and governance reforms in a company. The implications from the early landscape of shareholder activism, however, has largely been inconclusive since the period was plagued by many regulatory and structural barriers such as free-rider problems, and conflict of interest4.

Invesco can establish a new branch in a new market and then either inject cash or capital from their various funds. However, an investment in emerging market countries carries greater risks compared to more developed counties, for example many of the assets in these countries can be less liquid. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues (Invesco, 2013). Therefore, there are both increased risks as well as opportunity in many of the emerging markets that Invesco is operating in.

In examining hedge fund structure, we quickly recognize its primary limitation: exclusivity through the accredited investor clause. This clause states that for a hedge fund to avoid the basic limitations of other more traditional fund structures, retail investors must have a thorough understanding of the investment profile of the fund, as well as over $5 million in investible assets. For institutional investors, this number is $25 million. While this clause allows Hedge Funds to avoid registration with the SEC, it restricts the fund from accepting any non-accredited investors from investing in hedge funds. This population constitutes the vast majority of investors domestically. Furthermore, as

building strategies to invest in the emerging markets of the Exotican continent, with the primary

Both hedge funds and index funds stem from the idea of an independent mutual fund, but their potential to succeed is dependent upon the economy performing well.

diversification benefits from emerging equity markets are sensitive to the time periods of the tests, and in some cases, to the particular investment vehicle. There are similar diversification benefits accruing to direct exposure to emerging market indexes, managed funds and ADR portfolios. Their findings confirm that ADRs are useful for international diversification purpose.

Nowadays, hedge funds have developed the trading practices to a level never imagined before. Indeed, in order to keep investors interested in using the alternative investment world as a better strategy to achieve profits, hedge fund managers keep finding new innovative ways to achieve alpha. Investment strategies and styles are very diverse and adapted to the different risk profiles of investors; some of which are quantitative while others are more qualitative in their approach. For instance, global macroeconomic funds take positions based on their forecasts of global macroeconomic events

Hedge Funds are actively managed instruments with flexible mandates that allow fund managers to invest opportunistically in long and short positions across all asset classes.

Diversification - Investor gains the potential to capitalize on emerging economies by investing in different countries.

This risk can become less pronounced through investor education, the increased availability of information through the internet, and more consistent and rigorous accounting standards. Foreign regulations and taxes can be expensive and difficult to negotiate for even experience, professional portfolio managers. Currency risk is also a major factor in the decision to diversify overseas. Unhedged currency movements can easily destroy any profits from even the most successful investment. Though hedging may be an option for large investment banks and corporations, the individual investor does not have access to the same financial instruments or low transactions costs. The only option may be to remain unhedged or to find local instruments that are able to offer diversification benefits while removing some of these issues.