Blog Posts

Foreign bonds are instruments that are much more complex to trade or invest in than domestic bonds. There’s a lot to them that doesn’t meet the eye at first. For example, when amateur traders and investors decide to buy a foreign bond, what’s going to be the one thing they hyper-focus on? The nominal yield. […]

Several companies have dual or multiple share classes. Here are some notable examples: GOOG vs. GOOGL Alphabet Inc. (formerly Google Inc.) has two publicly traded share classes. GOOG represents Class C shares (no voting rights), while GOOGL represents Class A shares (one vote per share). BRK.A vs. BRK.B Berkshire Hathaway Inc. has two share classes. […]

Hedge funds and private equity firms have considerable influence on the dynamics of capital allocation. The question of whether they create economic value is a topic of debate among industry experts and the broader public. Here we look at the hedge fund and private equity industry and its role in creating economic value.   Key […]

In hedge funds, various lesser-known strategies are employed to amplify returns and mitigate risks. We look through them below.   Key Takeaways – Little-Known Strategies Hedge Funds Use to Juice Returns Some examples of little-known strategies hedge funds use to juice their returns: Offshore Fund Structure Transfer Pricing Debt Financing Reinsurance Business Variable Annuities Risk […]

In the context of the culture of a hedge fund or trading firm, what makes a successful one? We looked into the ideas of two of the most respected organizational psychologists, Adam Grant and Robert Kegan. The ideas of Grant and Kegan converge on the idea of two main themes for culture in an organization: […]

Setting up offshore fund structures and reinsurance companies can be a complex process, but it can offer several strategic benefits for hedge funds. Below we have an explanation of how this might work and why a hedge fund might pursue this strategy.   Key Takeaways – Reinsurance & Hedge Funds Diversification and Stable Income: Hedge […]

Contingent claim valuation is a method used in financial modeling to value financial instruments. This approach to valuation is typically used for derivative securities and other financial assets that have specific conditions, or contingencies, under which they pay off. In essence, the value of a contingent claim depends on the realization of some uncertain future […]

Various volatility models have been developed to understand, predict, and harness volatility. Volatility represents the degree of variation of a financial instrument’s price over time. While volatility is not necessarily risk itself, it’s a form of risk. So, broadly speaking, the higher the volatility, the riskier the security. We look into some of the most […]

In finance, volatility clustering refers to the observation that large price changes in financial markets are often followed by more large changes, and similarly, small changes are typically succeeded by more small changes. This observation was first noted by Mandelbrot in 1963, who stated that “large changes tend to be followed by large changes, of […]

The Exchange Rate Overshoot Hypothesis, often referred to as the Overshooting Model, is a concept in foreign exchange (FX) trading. It offers an explanation for the often volatile short-term movements in exchange rates. Understanding this hypothesis can provide FX traders with insights into the dynamics of the currency markets they trade.   Key Takeaways – […]