CAIA: Chapter 1 What is an Alternative Investment

...refers to the deviation of actual valuations from those valuations that would be anticipated in an efficient market.

the returns of many alternative investments are structured so that they are infrequently traded, and therefore their market returns are measured over longer time intervals.

refers to efforts of buying and selling securities to earn superior combinations of risk and return. Alternative investment analysis typically focuses on evauation acitive managers and their systems of active management, (most alt. investments =actively m

tends to focus on buying and holding securites in an effort to match the risk and return of a target such as highly diversified index

the returns o fthe fund would typically be comprared to the benchmark return, which is the return of the benchmark index or benchmark portfolio

is the difference between the return of a portfolio and its benchmark that is due to active management

means that returns are to be evaluated realtive to zer - or relative to the riskless rate

means that returns are to be evaluated relative to a benchmark

the term is often used to represent efforts to earn superior returns even when risk is not eliminated acuase the long and short positions are not in identical assets or are not held over the same time interval

If the primary objective of including an investment product in a portfolio is the superior average returns that it is believed to offer, then the product is often reffered to as a return enhancer.

If the primary objective of including an investment product in a portfolio is for the reduction in the portfolio's risk that is believed to offer through its lack of correlation with the portfolio's assets, then that product is often referred to return di