Table of Contents

Acknowledgments ix


Preface xi


PART ONE The Hedge Fund Industry 1


CHAPTER 1 Introducing Absolute Returns 3


Appendix: Risk Illusion 56


CHAPTER 2 Myths and Misconceptions 59


Appendix: Press Coverage of Hedge Funds 93


CHAPTER 3 Difference between Long-Only and Absolute Return Funds 98


Appendix: Guatemalan Dentist 132


CHAPTER 4 Advantages and Disadvantages of Investing in Hedge Funds 134


Appendix: On Market Efficiency and Unorthodox Economics 159


PART TWO Risk and Opportunities of Absolute Return Strategies 177


CHAPTER 5 Classification and Performance of Hedge Funds 179


CHAPTER 6 Relative-Value and Market-Neutral Strategies 199


CHAPTER 7 Event-Driven Strategies 251


CHAPTER 8 Opportunistic Absolute Return Strategies 286


Appendix: Long/Short Controversy 361


PART THREE The Fund of Hedge Funds Industry 369


CHAPTER 9 Industry Overview 371


CHAPTER 10 Advantages and Disadvantages of Investing in Funds of Hedge Funds 401


CHAPTER 11 The Alpha in Funds of Hedge Funds 420


PART FOUR Going Forward 451


CHAPTER 12 Game of Risk or Risky Game? 453


Notes 479


References 484


Index 499


About the Author 514

About the Author

ALEXANDER M. INEICHEN, CFA, is Managing Director and Head of Equity Derivatives Research at UBS Warburg in London. In October 2000, Ineichen authored In Search of Alpha: Investing in Hedge Funds, which has become the most often printed research publication in the documented history of UBS Warburg. He has also published several papers in peer-refereed financial journals, contributed numerous articles and chapters to financial newspapers, magazines, and books, and regularly speaks about hedge funds and risk at industry conferences.

Reviews

??offers a solid, comprehensive guide to speculators,
explaining the risks as well as the rewards. This book is a
valuable addition to every investor?s library.?
(Financial World, July 2004)
"It should be required reading for any investor who wants to
understand the absolute returns alternative to conventional wealth
management." (Hedgeworld.com)


??required reading for any investor who wants to
understand the absolute returns alternative to conventional wealth
management?? (HedgeWorld?s Inside Edge, 31 March
2003)