• Consider at least one concrete idea for starting a hedge fund.
• Also, consider the trading strategies and the portfolio construction method used for the new hedge fund.
  1. What is the main idea and why do you expect the idea to work?
  2. Please explain the trading strategies clearly. In particular, please outline the portfolio construction and rebalancing procedure.
  3. What factors generate the inefficiencies you are trying to exploit and why do they persist? How long do the inefficiencies persist and why?
  4. Why have other smart investors not yet exploited the opportunity? What types of risks and constraints do they face that may prevent them from successfully exploiting the opportunity?
  5. Would common investors be able to exploit this opportunity? Why or why not? Provide some evidence (even anecdotal) to show that the strategy "works."
  6. Provide some evidence (even anecdotal) to show that the strategy "works."
  7. Obtain data and perform empirical analysis on your own to demonstrate that the trading strategy yields superior performance.

Answer rating: 100% (QA)

Starting a hedge fund requires a strong investment idea that can generate high returns while managing risks One possible idea for a hedge fund is to i... View the full answer