Insights into the methodologies of different investment formulation techniques like ESG, Factor-Based and Alternative Investments.
Factor Investing
Introduction to Factor Investing
What is Factor Investing? Introduction Factor Investing is an approach wherein the investor focuses on identifying the key drivers that push the different asset-class returns (like stocks or bonds). These drivers could be macro-economic drivers or fundamental drivers. Following Factor Investing would allow an investor to dig deeper into the exposures (think risks) for each…
Application of Factor Based Investing
Setting the Context: Just like investors analyse different asset classes to allocate their investments, another style of investing is observing the exposure of the investment portfolio to different factors. Factors are the drivers of return across different asset classes. For example, consider growth of GDP, it’s pretty intuitive that when an economy is performing well,…
Alternatives
Hedge Funds 101
Introduction This week, let’s gain a good understanding about “What exactly Hedge Funds are?”, “What they do?” and “Who they cater to?”. Hopefully by the end of this article, you’d associate the term “Hedge Funds” with more than just fancy cars, an elite lifestyle and humungous mansions (that’s what most movies portray right?) Alright, let’s…
Derivatives 101
Setting the Context Derivatives are part of the Alternative Investment asset class and provide a very interesting dynamic in hedging investment portfolios. In this week’s article let’s go over “What exactly Derivatives are?”, “What are Forwards, Futures and Options?” and examples of using Forward Contracts and Call Options as hedging instruments. What is a derivative?…
Distressed Securities
Setting the context This week, we will be going over a particularly interesting kind of Hedge Fund Strategy called Distressed Securities. Did you know institutions which invest in such companies are called “vultures”? You’ll find out why below 🙂 Introduction As the name suggests, distressed securities belong to firms that are “distressed”, that is, they…
Statistical Arbitrage
What is Statistical Arbitrage? This is one of the strategies employed by Hedge Funds and High Frequency Traders, wherein they profit from mispricings in the market. The core idea being, prices of financial securities revert to their long-term historical average value over time (mean-reversion). To shed more light, let’s quickly walk through the mechanics of…
Sustainability
Sustainability & Investing
Setting the Context: With the rise of collective awareness of the importance of sustainability in our social, corporate and economic actions, Environmental, Social & Corporate Governance (ESG) based Investing has amassed vast popularity. This concept is definitely not a new one and the thought of being more “environmentally-friendly” or “consciousness” has prevailed for decades, however,…
Portfolio Management
Portfolio Management Theories
Setting the context: In this article, let’s delve into the history of Portfolio Management. We will explore the different theories which etched their mark in the domain of portfolio management. Theory 1 – Dow Theory Charles Dow the ex-editor of the Wall Street Journal, presented his theory on the influences on Stock Market movements. His…
Introduction to Asset Allocation – Part I
Guest Post – Tanumoy Hazra Introduction Asset Allocation is an investment process which aims at allocating capital in different assets classes (eg: stocks, bonds, cash, gold, etc) that helps in balancing the risk and returns in a portfolio in accordance to the investor’s goals, risk tolerance and investment horizon. Examples of types of Assets Stocks –…
Introduction to Asset Allocation – Part II
Guest Post – Tanumoy Hazra Introduction The importance of asset allocation lies in the overall risk-return performance of your portfolio. Both asset allocation and rebalancing your portfolio when required, play an important part in having a well diversified and a disciplined investment approach. The number of benefits provided by these 2 relatively straightforward investment strategies is immense.…
Introduction to Asset Allocation – Part III
Guest Post – Tanumoy Hazra Challenges of asset allocation execution: There are many challenges in executing an asset allocation. A few common ones have been outlined below: I) Costs & lock-ins: Some asset classes are available but their costs are very high. For instance: A private equity/real estate fund is available at fixed fee plus performance…
Introduction to Asset Allocation – Part IV
Guest Post – Tanumoy Hazra Why is it so important to determine an Asset Allocation Strategy? Expanding Options: The array of alternate investment options are growing day by day for investors. While they certainly make the portfolio construction process more complicated, they also provide new corridors for increasing potential returns while managing risk. It becomes…
Fixed Income
Introduction to Fixed Income
Guest Post by Vrushank Setty What is a Fixed Income (FI) instrument? A fixed-income instrument is an investment tool where the investors get a stable or a measurable form of return for their investments. We are using the term “measurable” because the return payments are known well in advance. These returns are in the form…
Fixed Income Part II
Guest Post by Vrushank Setty Key ideas discussed As we have discussed the basic terminologies of what Fixed Income instruments are in the previous post, lets dive deeper and understand the following concepts in this post: What is a Yield Curve?What are the common shapes a Yield Curve can take on? What is a Yield…
Yield Curve Theories
Article collaboration with: Vrushank Setty Setting the Context: Understanding and being able to predict how the Yield Curve is going to evolve over time, would enable investors to make better informed decisions for their capital allocations. In academia and Finance literature, certain popular theories have emerged which take a shot at explaining the behaviour of…
Coffee Time Finance 