| List of Figures | xiii | ||
| List of Tables | xiii | ||
| About the Authors | xv | ||
| Acknowledgments and Dedication | xvii | ||
| Introduction | 1 | ||
| 1. | Hedge Funds: Investing for Shorter-term Opportunities | 11 | |
| 1.1. | What Is a Hedge Fund, and How Does It Work? | 14 | |
| 1.2. | How Does a Hedge Fund Differ from a Mutual Fund? | 14 | |
| 1.3. | What Are the Different Approaches for Owning a Hedge Fund? | 17 | |
| 1.4. | Why Are Hedge Funds Vital to the Financial Industry and Society in General? | 18 | |
| 1.5. | What Advantages Do Hedge Funds Offer Investors? | 19 | |
| 1.6. | What Are the Disadvantages or Drawbacks of Owning Hedge Funds? | 20 | |
| 1.7. | What Are the Major Categories and Subcategories of Hedge Funds? | 22 | |
| 1.8. | How Are Hedge Funds Regulated? | 28 | |
| 1.9. | How Are Hedge Funds Taxed? | 30 | |
| 1.10. | What Selection Criteria Should Investors Use to Evaluate Hedge Funds? | 30 | |
| 1.11. | What Should an Investor Consider When Performing Due Diligence on Hedge Funds in the Fund Selection Process? | 33 | |
| 1.12. | How Is a Hedge Fund’s Performance Measured? | 35 | |
| 1.13. | How Have Hedge Funds Performed Since the 1990s? | 37 | |
| 1.14. | What Are Hedge Fund Replication Strategies? | 38 | |
| 1.15. | What Are ’40 Act Funds, and How Can Investors Use Them to Gain Exposures Similar to Hedge Funds? | 40 | |
| 1.16. | How Do Funds of Hedge Funds Differ from Multi-strategy Funds? | 41 | |
| 1.17. | Why Is Manager Selection a Critical Consideration in Picking Hedge Funds? | 42 | |
| 1.18. | What Traits Are Generally Associated with Successful Hedge Fund Managers? | 43 | |
| 1.19. | What Roles Do Hedge Funds Play in the Activist Investing Movement? | 45 | |
| 1.20. | What Are the Primary Concerns Investors Should Consider Before Investing in Hedge Funds? | 46 | |
| 1.21. | Should You Invest in Hedge Funds? | 47 | |
| 1.22. | What Are Some Online Resources for Hedge Funds? | 47 | |
| Takeaways | 48 | ||
| 2. | Private Equity: Investing for Longer-term Opportunities | 51 | |
| 2.1. | What Is PE, and How Does It Work? | 53 | |
| 2.2. | How Does PE Differ from a Hedge Fund? | 54 | |
| 2.3. | How Does PE Differ from Public Equity? | 54 | |
| 2.4. | Why Is PE Important to the Financial Industry and Society in General? | 55 | |
| 2.5. | What Advantages Does PE Offer Investors? | 57 | |
| 2.6. | What Disadvantages or Drawbacks Does PE Offer Investors? | 57 | |
| 2.7. | How Does VC Work? | 59 | |
| 2.8. | What Features Does an LPA Typically Cover? | 61 | |
| 2.9. | What Are Co-investments, and How Can They Potentially Help or Hurt Investors? | 63 | |
| 2.10. | What Is a Buyout Fund? | 65 | |
| 2.11. | What Main Risks Do PE Firms Face? | 66 | |
| 2.12. | What Do the Terms Drawdown and Vintage Year Mean? | 67 | |
| 2.13. | How Can Investors with Limited Capital Access the PE Market? | 67 | |
| 2.14. | How Is the Performance for PE Investments Benchmarked? | 68 | |
| 2.15. | What Is the Regulatory Framework for PE? | 69 | |
| 2.16. | How Are PE Funds Taxed? | 70 | |
| 2.17. | How Prevalent Are PE Funds Among Investors? | 70 | |
| 2.18. | Why Do Investors Typically Use IRR to Measure Performance? | 71 | |
| 2.19. | What Are the Primary Advantages and Disadvantages of Using IRR to Measure a PE’s Performance? | 72 | |
| 2.20. | What Other Measures Can Investors Use to Assess PE Performance? | 74 | |
| 2.21. | Why Is Manager Selection a Critical Consideration in PE Investing? | 77 | |
| 2.22. | What Factors Are Relevant to Consider in Selecting a PE Manager? | 78 | |
| 2.23. | What Are Debt Instruments Related to PE? | 79 | |
| 2.24. | What Role Does Mezzanine Debt Play for the Issuing Company? | 81 | |
| 2.25. | What Are Some Recent Trends and Innovations in PE Investing? | 82 | |
| 2.26. | What Are Some Online Resources for PE? | 84 | |
| Takeaways | 85 | ||
| 3. | Investing in Real Estate: It’s Not Just Your Home | 87 | |
| 3.1. | What Is Real Estate and Its Major Characteristics? | 89 | |
| 3.2. | What Are the Primary Property Types? | 90 | |
| 3.3. | What Are the Advantages of Owning Real Estate? | 91 | |
| 3.4. | What Are the Challenges and Risks to Real Estate Ownership? | 93 | |
| 3.5. | What Ways Are Available to Invest in Real Estate? | 95 | |
| 3.6. | What Is a REIT and Its Major Types? | 97 | |
| 3.7. | What Are the Different Investment Strategies – Core, Core-plus, Value-add, Opportunistic? | 99 | |
| 3.8. | What Are the Critical Features of REITs? | 101 | |
| 3.9. | What Approaches Can Investors Use to Value Real Estate Property? | 102 | |
| 3.10. | What Are Some Typical Real Estate Indices? | 105 | |
| 3.11. | How Does Direct Real Estate Investing Differ from Owning Shares in a REIT? | 106 | |
| 3.12. | What Is Real Estate Crowdfunding? | 108 | |
| 3.13. | What Methods Are Available for Measuring the Return of a Real Estate Investment? | 109 | |
| 3.14. | How Does Real Estate Compare to Other Asset Classes in a Portfolio Allocation Strategy? | 113 | |
| 3.15. | What Is a Mortgage, and How Are Mortgage Rates Determined? | 114 | |
| 3.16. | What Kind of Lenders Are Available, and How Do They Differ? | 115 | |
| 3.17. | What Factors Do Mortgage Lenders Examine? | 116 | |
| 3.18. | What Happens in a Foreclosure? | 117 | |
| 3.19. | What Tax Advantages and Disadvantages are Specific to Real Estate? | 118 | |
| 3.20. | What Common Mistakes Do Investors Make in Real Estate? | 119 | |
| 3.21. | What Are Some Online Resources for Real Estate? | 121 | |
| Takeaways | 122 | ||
| 4. | Investing in Commodities: Getting an Inflation Hedge | 123 | |
| 4.1. | What Are Commodities and Their Primary Attributes? | 126 | |
| 4.2. | What Are the Most Common Types of Commodities? | 127 | |
| 4.3. | What Are the Advantages of Investing in Commodities? | 131 | |
| 4.4. | What Are the Potential Disadvantages of Investing in Commodities? | 132 | |
| 4.5. | How Can Investors Trade Commodities? | 134 | |
| 4.6. | How Can Retail Investors Get Started in Investing in Commodities? | 136 | |
| 4.7. | What Factors Affect the Commodity Markets? | 139 | |
| 4.8. | What Ways Are Available to Measure Returns in Commodity Markets? | 140 | |
| 4.9. | Who Are the Prominent Participants in the Commodities Markets? | 142 | |
| 4.10. | What Are Recent Developments in Commodity Markets? | 143 | |
| 4.11. | What Are Common Commodity Indices? | 144 | |
| 4.12. | What Strategies Are Available for Investing in Commodities? | 145 | |
| 4.13. | What Mistakes Should Retail Investors Avoid When Investing in Commodities? | 147 | |
| 4.14. | What Are Some Online Resources for Investing in Commodities? | 148 | |
| Takeaways | 149 | ||
| 5. | Investing in Infrastructure: A Road to Economic Growth | 151 | |
| 5.1. | What Is Infrastructure? | 152 | |
| 5.2. | Why Is Infrastructure Necessary? | 153 | |
| 5.3. | Who Owns Infrastructure? | 153 | |
| 5.4. | Who Invests in Infrastructure Outside of Governments? | 155 | |
| 5.5. | How Can Infrastructure Be Classified? | 156 | |
| 5.6. | What Is the Difference Between Brownfield and Greenfield Investments? | 159 | |
| 5.7. | What Are the Common Attributes of Infrastructure Investments? | 160 | |
| 5.8. | Why Consider Investing in Infrastructure? | 162 | |
| 5.9. | What Are the Potential Risks Associated with Investing in Infrastructure? | 165 | |
| 5.10. | How Can Investors Gain Exposure to Infrastructure? | 168 | |
| 5.11. | What Are Publicly-Traded Vehicles Available for Investing in Infrastructure? | 168 | |
| 5.12. | What Are the Pros and Cons of Investing in Infrastructure Stocks? | 169 | |
| 5.13. | What Are Some Examples of Infrastructure Stocks? | 170 | |
| 5.14. | Why Are Mutual Funds an Attractive Vehicle for Investing in Infrastructure? | 172 | |
| 5.15. | What Are Some Examples of Infrastructure Mutual Funds? | 173 | |
| 5.16. | How Can Investors Choose Between Different Types of Infrastructure Mutual Funds? | 175 | |
| 5.17. | Why Are ETFs a Good Investment Vehicle for Infrastructure? | 176 | |
| 5.18. | What Benchmarks Are Available for Publicly Listed Infrastructure Securities? | 177 | |
| 5.19. | What Are Some Examples of Infrastructure ETFs? | 178 | |
| 5.20. | What Selection Criteria Should Investors Use Before Buying an Infrastructure ETF? | 179 | |
| 5.21. | What Is an MLP? | 181 | |
| 5.22. | How Is an MLP Structured? | 182 | |
| 5.23. | What Ways Are Available for Investing in an MLP? | 183 | |
| 5.24. | What Are Some Pros and Cons of Investing in MLPs? | 184 | |
| 5.25. | What Are Some Examples of the Largest and Most Popular MLP Stocks? | 185 | |
| 5.26. | What Factors Should Investors Consider Before Investing in an MLP? | 186 | |
| 5.27. | What Is an Infrastructure PE Fund? | 187 | |
| 5.28. | What Types of Municipal Debt Are Available for Investors Interested in Investing in Infrastructure? | 188 | |
| 5.29. | What Are the Tradeoffs Between Investing in Public (Listed) Versus Private (Unlisted) Infrastructure, Specifically in an Infrastructure PE Fund? | 189 | |
| 5.30. | Where Is a Good Place to Start Investing in Infrastructure for a Typical Individual Investor? | 190 | |
| 5.31. | What Types of Individual Investors Are Infrastructure Best Suited? | 191 | |
| 5.32. | What Are Some Useful Online Resources for Infrastructure? | 192 | |
| Takeaways | 193 | ||
| Index | 197 | ||
| Introduction | 1 | ||
| 1. | Hedge Funds: Investing for Shorter-term Opportunities | 11 | |
| 1.1. | What Is a Hedge Fund, and How Does It Work? | 14 | |
| 1.2. | How Does a Hedge Fund Differ from a Mutual Fund? | 14 | |
| 1.3. | What Are the Different Approaches for Owning a Hedge Fund? | 17 | |
| 1.4. | Why Are Hedge Funds Vital to the Financial Industry and Society in General? | 18 | |
| 1.5. | What Advantages Do Hedge Funds Offer Investors? | 19 | |
| 1.6. | What Are the Disadvantages or Drawbacks of Owning Hedge Funds? | 20 | |
| 1.7. | What Are the Major Categories and Subcategories of Hedge Funds? | 22 | |
| 1.8. | How Are Hedge Funds Regulated? | 28 | |
| 1.9. | How Are Hedge Funds Taxed? | 30 | |
| 1.10. | What Selection Criteria Should Investors Use to Evaluate Hedge Funds? | 30 | |
| 1.11. | What Should an Investor Consider When Performing Due Diligence on Hedge Funds in the Fund Selection Process? | 33 | |
| 1.12. | How Is a Hedge Fund’s Performance Measured? | 35 | |
| 1.13. | How Have Hedge Funds Performed Since the 1990s? | 37 | |
| 1.14. | What Are Hedge Fund Replication Strategies? | 38 | |
| 1.15. | What Are ’40 Act Funds, and How Can Investors Use Them to Gain Exposures Similar to Hedge Funds? | 40 | |
| 1.16. | How Do Funds of Hedge Funds Differ from Multi-strategy Funds? | 41 | |
| 1.17. | Why Is Manager Selection a Critical Consideration in Picking Hedge Funds? | 42 | |
| 1.18. | What Traits Are Generally Associated with Successful Hedge Fund Managers? | 43 | |
| 1.19. | What Roles Do Hedge Funds Play in the Activist Investing Movement? | 45 | |
| 1.20. | What Are the Primary Concerns Investors Should Consider Before Investing in Hedge Funds? | 46 | |
| 1.21. | Should You Invest in Hedge Funds? | 47 | |
| 1.22. | What Are Some Online Resources for Hedge Funds? | 47 | |
| Takeaways | 48 | ||
| 2. | Private Equity: Investing for Longer-term Opportunities | 51 | |
| 2.1. | What Is PE, and How Does It Work? | 53 | |
| 2.2. | How Does PE Differ from a Hedge Fund? | 54 | |
| 2.3. | How Does PE Differ from Public Equity? | 54 | |
| 2.4. | Why Is PE Important to the Financial Industry and Society in General? | 55 | |
| 2.5. | What Advantages Does PE Offer Investors? | 57 | |
| 2.6. | What Disadvantages or Drawbacks Does PE Offer Investors? | 57 | |
| 2.7. | How Does VC Work? | 59 | |
| 2.8. | What Features Does an LPA Typically Cover? | 61 | |
| 2.9. | What Are Co-investments, and How Can They Potentially Help or Hurt Investors? | 63 | |
| 2.10. | What Is a Buyout Fund? | 65 | |
| 2.11. | What Main Risks Do PE Firms Face? | 66 | |
| 2.12. | What Do the Terms Drawdown and Vintage Year Mean? | 67 | |
| 2.13. | How Can Investors with Limited Capital Access the PE Market? | 67 | |
| 2.14. | How Is the Performance for PE Investments Benchmarked? | 68 | |
| 2.15. | What Is the Regulatory Framework for PE? | 69 | |
| 2.16. | How Are PE Funds Taxed? | 70 | |
| 2.17. | How Prevalent Are PE Funds Among Investors? | 70 | |
| 2.18. | Why Do Investors Typically Use IRR to Measure Performance? | 71 | |
| 2.19. | What Are the Primary Advantages and Disadvantages of Using IRR to Measure a PE’s Performance? | 72 | |
| 2.20. | What Other Measures Can Investors Use to Assess PE Performance? | 74 | |
| 2.21. | Why Is Manager Selection a Critical Consideration in PE Investing? | 77 | |
| 2.22. | What Factors Are Relevant to Consider in Selecting a PE Manager? | 78 | |
| 2.23. | What Are Debt Instruments Related to PE? | 79 | |
| 2.24. | What Role Does Mezzanine Debt Play for the Issuing Company? | 81 | |
| 2.25. | What Are Some Recent Trends and Innovations in PE Investing? | 82 | |
| 2.26. | What Are Some Online Resources for PE? | 84 | |
| Takeaways | 85 | ||
| 3. | Investing in Real Estate: It’s Not Just Your Home | 87 | |
| 3.1. | What Is Real Estate and Its Major Characteristics? | 89 | |
| 3.2. | What Are the Primary Property Types? | 90 | |
| 3.3. | What Are the Advantages of Owning Real Estate? | 91 | |
| 3.4. | What Are the Challenges and Risks to Real Estate Ownership? | 93 | |
| 3.5. | What Ways Are Available to Invest in Real Estate? | 95 | |
| 3.6. | What Is a REIT and Its Major Types? | 97 | |
| 3.7. | What Are the Different Investment Strategies – Core, Core-plus, Value-add, Opportunistic? | 99 | |
| 3.8. | What Are the Critical Features of REITs? | 101 | |
| 3.9. | What Approaches Can Investors Use to Value Real Estate Property? | 102 | |
| 3.10. | What Are Some Typical Real Estate Indices? | 105 | |
| 3.11. | How Does Direct Real Estate Investing Differ from Owning Shares in a REIT? | 106 | |
| 3.12. | What Is Real Estate Crowdfunding? | 108 | |
| 3.13. | What Methods Are Available for Measuring the Return of a Real Estate Investment? | 109 | |
| 3.14. | How Does Real Estate Compare to Other Asset Classes in a Portfolio Allocation Strategy? | 113 | |
| 3.15. | What Is a Mortgage, and How Are Mortgage Rates Determined? | 114 | |
| 3.16. | What Kind of Lenders Are Available, and How Do They Differ? | 115 | |
| 3.17. | What Factors Do Mortgage Lenders Examine? | 116 | |
| 3.18. | What Happens in a Foreclosure? | 117 | |
| 3.19. | What Tax Advantages and Disadvantages are Specific to Real Estate? | 118 | |
| 3.20. | What Common Mistakes Do Investors Make in Real Estate? | 119 | |
| 3.21. | What Are Some Online Resources for Real Estate? | 121 | |
| Takeaways | 122 | ||
| 4. | Investing in Commodities: Getting an Inflation Hedge | 123 | |
| 4.1. | What Are Commodities and Their Primary Attributes? | 126 | |
| 4.2. | What Are the Most Common Types of Commodities? | 127 | |
| 4.3. | What Are the Advantages of Investing in Commodities? | 131 | |
| 4.4. | What Are the Potential Disadvantages of Investing in Commodities? | 132 | |
| 4.5. | How Can Investors Trade Commodities? | 134 | |
| 4.6. | How Can Retail Investors Get Started in Investing in Commodities? | 136 | |
| 4.7. | What Factors Affect the Commodity Markets? | 139 | |
| 4.8. | What Ways Are Available to Measure Returns in Commodity Markets? | 140 | |
| 4.9. | Who Are the Prominent Participants in the Commodities Markets? | 142 | |
| 4.10. | What Are Recent Developments in Commodity Markets? | 143 | |
| 4.11. | What Are Common Commodity Indices? | 144 | |
| 4.12. | What Strategies Are Available for Investing in Commodities? | 145 | |
| 4.13. | What Mistakes Should Retail Investors Avoid When Investing in Commodities? | 147 | |
| 4.14. | What Are Some Online Resources for Investing in Commodities? | 148 | |
| Takeaways | 149 | ||
| 5. | Investing in Infrastructure: A Road to Economic Growth | 151 | |
| 5.1. | What Is Infrastructure? | 152 | |
| 5.2. | Why Is Infrastructure Necessary? | 153 | |
| 5.3. | Who Owns Infrastructure? | 153 | |
| 5.4. | Who Invests in Infrastructure Outside of Governments? | 155 | |
| 5.5. | How Can Infrastructure Be Classified? | 156 | |
| 5.6. | What Is the Difference Between Brownfield and Greenfield Investments? | 159 | |
| 5.7. | What Are the Common Attributes of Infrastructure Investments? | 160 | |
| 5.8. | Why Consider Investing in Infrastructure? | 162 | |
| 5.9. | What Are the Potential Risks Associated with Investing in Infrastructure? | 165 | |
| 5.10. | How Can Investors Gain Exposure to Infrastructure? | 168 | |
| 5.11. | What Are Publicly-Traded Vehicles Available for Investing in Infrastructure? | 168 | |
| 5.12. | What Are the Pros and Cons of Investing in Infrastructure Stocks? | 169 | |
| 5.13. | What Are Some Examples of Infrastructure Stocks? | 170 | |
| 5.14. | Why Are Mutual Funds an Attractive Vehicle for Investing in Infrastructure? | 172 | |
| 5.15. | What Are Some Examples of Infrastructure Mutual Funds? | 173 | |
| 5.16. | How Can Investors Choose Between Different Types of Infrastructure Mutual Funds? | 175 | |
| 5.17. | Why Are ETFs a Good Investment Vehicle for Infrastructure? | 176 | |
| 5.18. | What Benchmarks Are Available for Publicly Listed Infrastructure Securities? | 177 | |
| 5.19. | What Are Some Examples of Infrastructure ETFs? | 178 | |
| 5.20. | What Selection Criteria Should Investors Use Before Buying an Infrastructure ETF? | 179 | |
| 5.21. | What Is an MLP? | 181 | |
| 5.22. | How Is an MLP Structured? | 182 | |
| 5.23. | What Ways Are Available for Investing in an MLP? | 183 | |
| 5.24. | What Are Some Pros and Cons of Investing in MLPs? | 184 | |
| 5.25. | What Are Some Examples of the Largest and Most Popular MLP Stocks? | 185 | |
| 5.26. | What Factors Should Investors Consider Before Investing in an MLP? | 186 | |
| 5.27. | What Is an Infrastructure PE Fund? | 187 | |
| 5.28. | What Types of Municipal Debt Are Available for Investors Interested in Investing in Infrastructure? | 188 | |
| 5.29. | What Are the Tradeoffs Between Investing in Public (Listed) Versus Private (Unlisted) Infrastructure, Specifically in an Infrastructure PE Fund? | 189 | |
| 5.30. | Where Is a Good Place to Start Investing in Infrastructure for a Typical Individual Investor? | 190 | |
| 5.31. | What Types of Individual Investors Are Infrastructure Best Suited? | 191 | |
| 5.32. | What Are Some Useful Online Resources for Infrastructure? | 192 | |
| Takeaways | 193 | ||
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