30187 - ALTERNATIVE INVESTMENTS
Department of Finance
Course taught in English
Go to class group/s: 31
CLEAM (6 credits - I sem. - OP | SECS-P/11) - CLEF (6 credits - I sem. - OP | SECS-P/11) - CLEACC (6 credits - I sem. - OP | SECS-P/11) - BESS-CLES (6 credits - I sem. - OP | SECS-P/11) - WBB (6 credits - I sem. - OP | SECS-P/11) - BIEF (6 credits - I sem. - OP | SECS-P/11) - BIEM (6 credits - I sem. - OP | SECS-P/11) - BIG (6 credits - I sem. - OP | SECS-P/11) - BEMACS (6 credits - I sem. - OP | SECS-P/11) - BAI (6 credits - I sem. - OP | SECS-P/11)
Course Director:
BRUNELLA BRUNO
BRUNELLA BRUNO
Suggested background knowledge
Students attending this course are expected to be familiar with the basic concepts of probability, statistics, financial markets and investments.
Mission & Content Summary
MISSION
Since the 2008 financial crisis, alternative investments have rapidly emerged as a major asset class. A low interest rates environment, coupled with dramatic shifts in financial markets, has fueled the demand for non-traditional investments that offer positive returns in diverse market conditions with low correlation to traditional assets. This trend has accelerated following the COVID-19 emergency, with the rapid expansion of new industries such as Artificial Intelligence (AI), Digital Assets, and Energy Transition being driven by capital allocation into private markets.
Building on these premises, the course aims to provide an in-depth understanding of the main alternative assets employed by private and institutional investors globally. The emphasis is on the following macro categories: (i) liquid assets, such as hedge funds, and (ii) illiquid assets, including private debt, private equity, real estate, and passion investments. These asset classes will be analyzed in relation to their key characteristics, investment strategies, and portfolio considerations, including alternative risk premia and their contribution to portfolio performance. To account for the disruptive changes occurring in the industry, key concepts related to sustainable investing and AI will also be discussed. This course is part of the Engage Track within the CIVICA Bachelor Engage Track of the CIVICA Alliance framework.
CONTENT SUMMARY
Main topics/asset classes covered:
What are alternative investments? Definition and key characteristics.
Hedge funds and liquid alternatives: Investors typologies and regulatory framework.
Illiquid alternatives: Private debt (focus on structured and distressed debt).
Illiquid alternatives: Investments of passion (art and other collectibles).
Illiquid alternatives: Private equity and venture capital
Illiquid alternatives: Real estate and infrastructure
Liquid & Illiquid: Sustainable investments and ESG criteria
Asset Allocation Plan: why alternatives matter in portfolio construction
Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
- Characterize the common features of alternative investments and their markets.
- Identify the specificities of different alternative assets.
- Understand the benefits (e.g., return enhancement and/or risk diversification), and pitfalls of adding an alternative investment to a reference portfolio.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
- Measure risk/return profile of alternative assets and build up optimal portfolios by using both traditional and non traditional asset classes.
- Assess and choose among different alternative assets by using both qualitative and quantitative metrics.
- Measure basic hedge funds performance in different market conditions.
- Advise a potential client on how to incorporate alternative investment in his/her portfolio according to his/her investment objectives and risk tolerance.
- Think critically, interact with their peers and defend their position.
Teaching methods
- Lectures
- Guest speaker's talks (in class or in distance)
- Practical Exercises
- Collaborative Works / Assignments
DETAILS
- Face-to-face lectures.
- Case studies (e.g., the Yale endowment).
- Guest speakers from the industry (ideally, one guest speaker for type of alternative asset class).
- Exercises to build up optimal asset allocations by using Excel solver.
- Group Assignment: a (non-mandatory) workgroup to be carried out throughout the cours. The purpose of this on-going exercise is to build up a real asset allocation plan according to the specific needs and requirements of institutional investors.
Assessment methods
| Continuous assessment | Partial exams | General exam | |
|---|---|---|---|
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x | ||
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x |
ATTENDING STUDENTS
Details on attendance rule and exam structure will be provided at the beginning of the course and made available in B-Board.
NOT ATTENDING STUDENTS
Details on attendance rule and exam structure will be provided at the beginning of the course and made available in B-Board.
Teaching materials
ATTENDING AND NOT ATTENDING STUDENTS
Required readings, PowerPoint slides used in class, and any additional material are made available in Bboard.
The books below (which are not compulsory) may provide helpful additional information on traditional and alternative investment vehicles, as well as on risk / return indicators and investment analysis:
- CAIA, Alternative investments Level I, 3rd Edition.
- SOKOLOWSKA, The principles of alternative investment management, Springer 2016.
Last change 06/09/2024 15:52