Alternative Investments: Beyond Stocks and Bonds
Look at investment possibilities outside the traditional markets for stocks and bonds, dealing with such topics as private equity, hedge funds, real estate, commodities and fine art investments.
|Name of minor:||Alternative Investments: Beyond Stocks and Bonds|
|Offered by:||Rotterdam School of Management, Erasmus University (RSM), Department of Finance|
|Other programmes which are contributing to the minor:||not applicable|
|Access:||See admissions matrix|
Is the purchase of a multi-million dollar painting purely an extravagance? How much would you lend to a company residing in a garage? What issues should be considered when entering the real estate investment markets? And what does it all have to do with financial management? The aim of this course is to look at investment possibilities outside the traditional markets for stocks and bonds, dealing with such topics as private equity, hedge funds, real estate, commodities and fine art investments. We will teach you how to critically analyse such alternative investments.
During this course we discuss pooled investment vehicles such as hedge funds, mutual funds or private equity funds, as well as markets often ignored in standard finance textbooks. We examine how recent turbulence in global real estate markets requires that we learn how to evaluate real estate investment proposals.
Following this course, students have a basic working knowledge of the functions of financial markets beyond stocks and bonds, plus detailed knowledge of topics such as:
- How to invest – how to choose from alternative investment opportunities?
- What is the risk/return trade-off?
- What determines the value of alternative investments?
- How to create mixed portfolios of traditional and alternative investments?
- Why should alternative investments be incorporated into asset allocation decisions?
- What instruments are available to set up a real estate investment portfolio?
- What is a feasible international real estate investment strategy?
Moreover, students should have obtained the following skills:
- Draw conclusions about future development of hedge funds, private equity funds
- Understand valuation and principles of fund management, applied to the art world
- Critically analyse a real estate investment proposal; be capable of applying sophisticated evaluation tools
- Critically discuss an academic article
Module 1: Investment Strategies (9 ECTS)
- ECTS: 9
- Content: This module begins with an overview of basic knowledge related to investments in financial markets. In particular, we focus on risk and return ratios, the predictability of financial market returns and the behaviour of investors. Second, we will study the practical relevance of this theory in the context of pooled investment vehicles (hedge funds, private equity funds) and alternative asset classes (commodities, art).
- Teaching method: Module 1 consists of interactive lectures followed by student presentations. Student groups will present chosen topics. Each presentation includes a written essay and should critically review the research questions that are examined in the papers, the empirical method employed and the major findings and possible extensions to the work. During the session, students will also receive assignments that must be solved individually.
- Teaching materials:Reading material includes a textbook: Burton Malkiel, A Random Walk Down Wall Street (Ninth Edition), Norton & Company, NY, 2007.
- Additional material: Journal articles
- Contact hours: Ten 3-hour sessions (5 lectures (including guest lecture) and 5 student presentation sessions).
Module 2: Real Estate Investment Appraisal
- ECTS: 6
- Content: The primary objective of the course is to provide a framework on the workings of real estate appraisal and investments. The course is applied in nature; actual practices of real estate professionals are taught and discussed. Some topics included are: contemporary appraisal techniques, mass appraisal, real option theory and international real estate investments.
- Teaching method: The module is lecture-oriented. Questions and student participation are strongly encouraged. Students address numerous problems from the text and lecture notes, as well as homework assignments. Students present, discuss and debate class assignments.
- Teaching materials: Reading material includes a textbook: Geltner, Miller, Clayton and Eichholtz, Commercial Real Estate Analysis and Investments (Second Edition), 2007
- Additional material: Journal articles
- Contact hours: Seven 3-hour sessions (lectures, on-site guest lectures and case discussions).
Method of examination:
The final grade for the course is a weighted average of the grades from the two modules: Module 1 (60%) and Module 2 (40%).
For module 1, the final mark is based on the written exam with open questions (50%), assignments (25%) and essay/presentation (25%).
For module 2 there are two possibilities: A number of groups will be randomly selected to present one of the two cases prepared during the course. For these groups the final mark will be a weighted average of the marks for class assignments/presentation (15% per case and 10% for presentation) and the final exam (60%). For groups not presenting the cases will have a weight of 20% each, with the remaining 60% weight allocated to the exam grade.
Composition of final grade:
A passing mark of 5.5 is required for both the exam and the final grade.
An exam feedback session will be scheduled.
Dr. Marta Szymanowska
Phone: (010) 408 9607