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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

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Hedge Funds as an Asset Class

Hedge Funds as an Asset Class

Trevor Pugh

20 years: Trading & hedge funds

Hedge funds occupy an important place in the asset class spectrum. Unlike traditional asset classes they have the ability to add returns regardless of market direction. This video by Trevor Pugh is a brief introduction to hedge funds, wherein he highlights the important characteristics of hedge funds and also talks about some of its distinguishing features.

Hedge funds occupy an important place in the asset class spectrum. Unlike traditional asset classes they have the ability to add returns regardless of market direction. This video by Trevor Pugh is a brief introduction to hedge funds, wherein he highlights the important characteristics of hedge funds and also talks about some of its distinguishing features.

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Hedge Funds as an Asset Class

15 mins

Key learning objectives:

  • Define short selling

  • Outline the two major characteristics of hedge funds

  • Define unencumbered cash

Overview:

Hedge funds have unquestionably earned a place in the portfolios of more sophisticated investors. Their use of short selling and leverage helps them to stand out from more traditional investments. They are typically lower than equities, but with reduced volatility, making them a more appealing prospect in many models.

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Summary

What is Short selling?

Short selling is where a fund sells an asset such as an equity which it does not own. It can do this by borrowing the security in order to allow it to make delivery to the buyer. This borrowing is normally done on an overnight basis but can be continually ‘rolled over’ or extended on a daily basis.

What are the two major characteristics of hedge funds?

  • The ability to short sell
  • The use of leverage

What are the features of hedge funds?

  • Fees are higher than other asset classes, and composed of a management fee and performance fee
  • Minimum investment tends to be considerably higher than normal funds, and the investment tends to be marketed at sophisticated investors and institutions
  • Liquidity terms are frequently tougher in a hedge fund than a regular fund. These are the terms on which an investor can withdraw their investment.

Why are liquidity terms tougher in hedge funds?

  • There may be more illiquid positions in a hedge fund which can take longer to unwind
  • A sudden withdrawal of a large amount of the AUM of a fund can have a destabilising effect on the fund positions

What is the Capital Asset Pricing Model?

The model that describes the relationship between risk and expected return for a security, usually equities.

The expected return is made up of two parts:

  • The risk free rate - the yield on a US Treasury bond, as these are considered to have zero risk.
  • The expected return of the market over and above the risk free rate, multiplied by the Beta of the stock.

What is Unencumbered cash?

This cash is not deployed in the market in any way and serves as a buffer for losses.

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Trevor Pugh

Trevor Pugh

Trevor has worked in finance since 1995. He started his career in investment banking after studying Law at Cambridge and taking a Masters Degree in Financial Services from University College Dublin. Trevor spent 18 years at Barclays investment bank where he became a Managing Director and head of Gilt trading. He currently works as Chief Operating Officer for a hedge fund.

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