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Alternative Alternatives. Risk, Returns and Investment Strategy. The Wiley Finance Series

  • ID: 1842617
  • Book
  • February 2011
  • 264 Pages
  • John Wiley and Sons Ltd
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In the aftermath of the financial crisis, investors are searching for new opportunities and products to safeguard their investments for the future. Riding high on the wave of new financial opportunities are Alternative Alternatives (AA). However, there is a lack of information on Alternative Alternatives: What are they? How do they work? How can investors profit from them? In
Alternative Alternatives, Sona Blessing addresses all of these questions.

Blessing defines Alternative Alternatives based on the following hypothesis: If the origin of the risk lies outside the financial markets, then is should be insulated from the vagaries of those markets. The recent credit and sovereign debt crises have served to defend this hypothesis and have upheld the conclusion that AA assets and strategies offer a risk–return profile that is distinct from those offered by traditional and main stream hedge fund strategies.

AA strategies include timberland investing, insurance risk transfer, asset/loan based lending (aviation, shipping, trade, entertainment, litigation financing, etc,), collectables and extraction strategies such as volatility and behavioural finance. Alternative Alternatives reviews each asset/strategy on a standalone basis, profiling its characteristics, an analysis of its strengths, weaknesses, opportunities and threats (SWOT), and its risk/reward drivers. Blessing describes how to integrate these assets and strategies within a portfolio by examining their peculiarities, the challenges and constraints of each, how they are being used in the real world, how they are implemented, and the results that they have achieved. Finally, the book reviews the scope, scalability and prospects for each asset/strategy in the future.

Alternative Alternatives is a one stop resource on this new investment class, providing an in–depth analysis of these assets and strategies, which will leave investors with everything they need to identify, allocate and manage them.

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Preface ix

Acknowledgements xi

A Note on How to Use This Book xiii

Introduction xv

Epilogue xxi

1 Timberland 1

1.1 Introduction 1

1.2 Statistics on Investable Timberland 1

1.3 Asset Characteristics 5

1.4 Investment Drivers 6

1.5 Return Drivers 9

1.6 Perceived Risk 20

1.7 Real Risks 21

1.8 Measuring Risk and Returns: Science, Art, Boots on the Ground 22

1.9 Investment Objective 25

1.10 Investment Strategy 27

1.11 In Practice 29

1.12 Country Case Studies 35

1.13 Species Case Study 49

1.14 Emergence and Outlook 52

1.15 2010 And Beyond 53

1.16 Opportunities and Challenges Facing Timberland Investors 55

1.17 Conclusion 56

2 Insurance Linked Risk Transfer 57

2.1 Introduction 57

2.2 Classification 60

2.3 Asset Characteristics 61

2.4 Risks 62

2.5 Return Drivers 64

2.6 Constraints 64

2.7 The Players 64

2.8 Evolution 66

2.9 Non–Life Insurance Linked Risk Transfer 68

2.10 In Practice 85

2.11 Life Insurance Linked Risk Transfer 87

2.12 Pandemic–related Insurance Investing Extreme Mortality Risk 98

3 Asset–Based Lending 103

3.1 Introduction 103

3.2 Aviation Finance, Loan–Based Lending, Leasing 108

3.3 Ship Financing, Leasing, Investing 114

3.4 Trade Finance 120

3.5 Litigation led Investing 130

3.6 Lending Against Hospital Receivables 141

3.7 Film Financing 144

3.8 Music Investing 152

3.9 Appendix 158

4 Collectables 165

4.1 Introduction 165

4.2 Investing in Art 166

4.3 Case Study Series (with Philip Hoffman, The Fine Art Fund Group) 172

4.4 Investing in Photography 184

4.5 Investing in Wine 188

4.6 Investing in Vintage Cars 199

5 Extraction Strategies 211

5.1 Volatility Investing 211

5.2 Behaviour Finance 215

6 Place in a Portfolio 225

Further Reading 231

Index 235

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Sona Blessing
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