27 Mar 2014

Leadership is a "Contact Sport"

Executive Coach, Mike Grant, explains why "Leadership is a Contact Sport". Drawing on his experience managing a sales team of over 600 people for the Lloyds Banking Group, Mike Grant explains why leaders need to get away from the desk and the laptop and engage with their people Read More


26 Mar 2014

Continuous Learning as Sustainable Competitive Advantage

Adrian Grant, Managing Director, BG Credit Limited discusses how to apply the 70:20:10 model to learning within the Credit environment. This article explores how best to configure learning in the world of credit in order to deliver the desired outcomes.

18 Mar 2014

BG Credit Public Courses

BG Credit, the specialised credit training division of the BG Consulting Group, announces its schedule of public training courses for spring 2014.

Want to find out more please contact us http://www.bgconsulting.com/

4 Mar 2014

Hedge Funds

The term “hedge funds” is rather a misnomer, as it may give the impression that risks are hedged/offset. In reality, a hedge fund is an unconstrained, unregulated investment vehicle. However, as we shall see, the strategies employed by hedge funds do vary widely, so it is invidious to label them all as inherently very risky.

Key differences between mutual funds and hedge funds are:

  • Hedge funds focus on absolute returns rather than returns relative to a benchmark
  • Hedge funds use shorting (selling securities you do not own in the expectation of being able to purchase them later at a lower price). This is an advantage to investors in bear markets, as traditional fund managers are typically long of markets
  • Hedge funds use leverage, i.e. borrowing money to take more substantial market risk
  • Hedge funds use derivatives more frequently
  • Hedge funds do have a higher asset turnover and trading activity
  • Hedge fund managers often invest in the funds they are managing
  • The fees paid by investors to hedge funds usually have an element that is related to the performance of the fund
  • Hedge fund styles are many and various:
  • Macro: following trends linked to economic/political developments
  • Relative value: how assets perform relative to each other, often independent of the underlying market conditions. An example of this would be long Tesco shares and short Sainsbury shares
  • Event-driven strategies. Examples include M&A risk arbitrage and trading distressed securities
  • Opportunistic strategies. Traditional fund managers typically have relatively low asset turnover, operate a collegiate structure and are constrained by their benchmarks. The advantage of hedge funds is their ability to exploit pricing anomalies quickly and to take substantial risk
  • As higher volume traders, the hedge funds can have an influence on asset prices out of proportion to the value of their holdings