Alternative Investment Performance and Returns
Free CFA Level I lesson in Alternative Investments. 13 min read, ~1,983 words.
Sharpe ratio misleads for alt investments because returns are non-normal, illiquid, and smoothed, which depresses reported volatility and inflates the ratio. Better-suited ratios: Sortino uses downside deviation, Calmar uses max drawdown, Treynor uses beta. "2 and 20" = 2% management fee on AUM/committed capital + 20% incentive fee on profits...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- performance and returns
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