Contents

Introduction

Chapter 1 : Everything You Know Is Wrong

Addicted to Stocks

Bye Bye Miss Portfolio Pie

Chapter 2 : Efficient Market Theory and Its Discontents

Exploiting Market Anomalies for Fun and Profit

Capture that Anomaly!

Bonds

A Risk-Balanced Bond Portfolio

All Together Now

Chapter 3 : Collectibles as Investments

Love and Pleasure

Buying and Selling

How Not to Make Money

Chapter 4 : More Alternatives We Don’t Love

Private Equity

“Buy/Write” Funds

Structured Products

130/30 Funds

Gold

Chapter 5 : Conventional Alternatives I: Commodities

Back to the Futures Market

How Do Investors Use Futures Markets?

So What?

Do Commodities Add Value to a Portfolio?

How Do We Invest in It?

Chapter 6 : Conventional Alternatives II: Real Estate

How Do Investors Use REITs?

How Do REITs Work?

Do REITs Add Value to a Portfolio?

How Do We Invest in It?

Chapter 7 : The Ultimate Alternative Investments

Say Whaa . . . ?

Exploiting Market Anomalies

Illusion versus Reality

It Gets Worse

Chapter 8 : So Why Invest in Hedge Funds?

Final Answer

Hedge Funds Meet Mutual Funds

Master Beta

Chapter 9 : A Field Guide to Hedge Funds, Part One

#1. Long/Short Equity

#2. Market Neutral Equity Funds

#3. Dedicated Short Bias

#4. Global Macro

#5. Managed Futures

Chapter 10 : A Field Guide to Hedge Funds, Part Deux

#6. Convertible Arbitrage

#7. Fixed-Income Arbitrage

#8. Event-Driven

#9. Emerging Markets

#10. Multi-Strategy

How They Stack Up

Chapter 11 : One-Fund Solutions

Hedge Fund Replicants

Fun, Fun, Funds ’til Her Daddy Takes the T-Bill Away

Multi-Strategy

Alternative: Roll Your Own Hedge Fund

Chapter 12 : Hedge Funds Pigs in Mutual Fund Blankets

Long/Short Funds

Market Neutral Equity Funds

Dedicated Short Bias Funds

Global Macro

Managed Futures

Convertible Arbitrage

Fixed-Income Arbitrage

Event-Driven

Emerging Markets

Chapter 13 : Adding Alternative Investments to Your Portfolio

Our Final Exam

Conventional Alternatives

The Hedge Fund Couch Potato Portfolio

A Deeper Dive

The Portfolio of the Future

Conclusion : Quest into the Unknown

Appendix : Fundamentals

Acknowledgments

About the Authors