Alternative investments

For creating a well-diversified portfolio that could sustain financial turmoil, it is important to have knowledge not only about investments in traditional markets (stocks and bonds) but also in markets of other asset classes (i.e. the pros and cons of alternative investment categories such as hedge funds, commodities, private equity and real estate) to have a successful career in finance. The aim of this course is to provide students with knowledge of investment possibilities outside the traditional markets for stocks and bonds.

To have a successful career in finance it is important to have knowledge of investment possibilities outside the traditional markets for stocks and bonds. Learn about alternative investment categories such as hedge funds, commodities, private equity and real estate.

The aim of this course is to deepen students’ knowledge of investments possibilities outside the traditional markets for stocks and bonds. The course is set up to be academically rigorous while practical insights from investment professionals ensure the critical link with the investment world.

The course begins with an overview of the knowledge related to investments in financial markets, e.g. the return and risk characteristics of investment strategies, the Efficient Market Hypothesis, and asset pricing models (e.g. the CAPM model). Second, we will discuss several alternative investments e.g. hedge funds, real estate, commodities, and private equity.

• Understand and explain the theories underlying traditional investments (in stocks and bonds) and a range of alternative investments (e.g. hedge funds, real estate, commodities, and private equity).
• Understand and determine the return and risk characteristics and their trade-off of traditional investments and a range of alternative investments.
• Create portfolios consisting of traditional and/or alternative investments and to determine their performance.
• Determine whether and which (traditional and/or alternative) investments adds value to an existing portfolio.
• Use Excel to construct, calculate, and evaluate the performance of portfolios consisting of traditional and/or alternative investments.
• Understand and summarize academic articles published in top finance journals.

This minor is not open to students from EMC, ESHCC, ESL, ESSB, ESPhil, and ESHPM. This minor is targeted to students from RSM and ESE and other students who have taken a basic finance and statistics courses as part of their Bachelor. Prior experience with Excel might be helpful. It might be hard(er) to pass the minor or to pass the minor with a good grade without any prior knowledge on finance and statistics, and when engaging in other activities (e.g. other courses, jobs, internships, being a 2nd year student, etc.) during the minor.

Teaching methods
The course consists of interactive lectures (including guest lectures). Attendance to all lectures is mandatory. Attendance will be checked. For this minor, students are allowed to miss two lectures (with or without reason). Missing more than two lectures will result in failing the course.

Teaching materials
Compulsory: textbook and various academic articles.
Further details will be announced on Canvas at the start of the course.

Method of examination
A written test (with open questions) that counts for 60% of the final grade, and several group assignments that together count for 40% of the final grade.
The final grade for the course is a weighted average of the written test with open questions and assignments.

Composition final grade
The final grade for the course is a weighted average of the written test with open questions and group assignments. Note that all partial grades are only valid for the current academic year. In order to pass the course a final grade of 5.5 is required. In order to obtain a final grade you need to score at least 4.5 on the written test. There is a resit opportunity for the written test but not for the assignments.