FMP 3. Fund Management

Learning Objectives

1) Differentiate among open-end mutual funds, closed-end mutual funds, and exchange-traded funds (ETFs).

2) Identify and describe potential undesirable trading behaviors at mutual funds.

3) Explain the concept of net asset value (NAV) of an open-end mutual fund and how it relates to share price.

4) Explain the key differences between hedge funds and mutual funds.

5) Calculate the return on a hedge fund investment and explain the incentive fee structure of a hedge fund, including the terms hurdle rate, high-water mark, and clawback.

6) Describe various hedge fund strategies including long/short equity, dedicated short, distressed securities, merger arbitrage, convertible arbitrage, fixed income arbitrage, emerging markets, global macro, and managed futures, and identify the risks faced by hedge funds.

7) Describe characteristics of mutual fund and hedge fund performance and explain the effect of measurement biases on performance measurement.