Over the years, I have watched as a number of experienced friends and colleagues move from the sell side to the buy side and struggle with the business realities of the money management business. Their problems were mainly attributable to the fact that there is a lot more to investment management than knowing what to buy and sell.
I have posted on this topic (see part 1, part 2 and part 3). I decided to work on a book outlining some of the issues surrounding the business of investment management, as training in this topic seems to be severely deficient. Just as dentists come out of dental school knowing all about dentistry, but most don’t know anything about running a dental practice, analysts come out of business school knowing little about investment management.
I have outlined a table of contents for the proposed book. I would welcome any comments from investment professionals or MBA students in business programs.
How do you feel about this topic?
Is there anything else that I should address?
Please leave your feedback in the comment section or email me at cam at hbhinvestments.com.
Table of Contents
Introduction: Just because you can cook doesn’t mean you can run a restaurant
Investment management is a business, treat it that way.
Part I: The Investment Process
Chapter 1: The investment process is the production line of your business
Selection: Deciding on what to buy and sell
Portfolio construction: How much do you buy and sell?
Portfolio Implementation: Trading is a game of inches
Review and Control: Putting it all together
Chapter 2: Product Engineering and the Client Relationship Benchmark
Learning to actively listen
Building a client relationship benchmark is the key to business risk management
The defined benefit pension plan client
The individual client
The Family Office client
The hedge fund trader
Introducing the Factor Analyzer
Chapter 3: Portfolio construction and optimization
The fundamental law of active management
Why use a portfolio optimizer
Portfolio construction the fundamental way
Quantitative risk models have many flavors
Stupid quant tricks, or how to use risk models
Sizing your stock bets
The cautionary tale of manager A: When to use optimization
Chapter 4: Trading is a game of inches
The best execution standard
Legal, regulatory and ethical considerations
Measuring execution costs
Trading intelligently: No one-size-fits-all solution
Chapter 5: Troubleshooting your portfolio
The Deming system
Measure, measure, measure!
Is selection positive? But portfolio performance negative?
Dealing with difficult or unexpected macro environments
Learning from failure
Investment philosophy, business model and business risk
Part II: Marketing and Client Relationship Management
Chapter 6: Marketing to gatekeepers
The due diligence process: The 5Ps
Maintaining discipline to stay on message
The mutual fund gatekeeper
The consultant gatekeeper
Chapter 7: Managing client relationships
Business risk management
Client reporting and communication: telling your story
Being proactive to build relationships
Using clients for product development
The portfolio dispersion conundrum
The investment process change conundrum
Part III: Hedge Fund Operations
Chapter 8: So you want to start a hedge fund?
The hedge fund business model
The business plan
The hedge fund startup organization: personnel functions and requirements
Legal structure and financial structure
The hedge fund due diligence process
Managing the process well enough to grow and survive