Essays on Numeric Investors - Investment Approaches Assignment

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The paper "Numeric Investors - Investment Approaches " is a perfect example of a finance and accounting assignment. Numeric Investors is a business that provides various short term and long term services such as equity portfolios using a value model integrated with a momentum model. They include the development of a diversified, quantitative investment platform globally that includes Numeric and AHL exceeding $25 billion funds being managed (Harvard Business School, 1997). The company provides long-short strategies using a high turnover portfolio approach in investing. This entailed holding long position portfolios combined wit short term positions.

The long positions bought “ good” stocks while short positions entailed selling “ bad” stock. Numeric exploits its potential to predict probable losers and winners through a process described as “ double alpha” strategy. Additionally, Numeric Investors is dedicated towards the development and process implementation of various quantitative investment approaches focused on the ability for alpha generation in the investment processes. The company’ s primary goal is maximizing total dollars of surplus return present in clients' portfolios while also considering a sensible level of risk in the entire processes.

In order for Numeric Investors to remain consistent with their objective, they remain committed through the allocation of significant resources toward creating an effective investment team coupled with solid research and modeling capacities (Harvard Business School, 1997). The firm conducts research in the various steps of the entire investment process beyond the alpha modeling investment aspect, research is therefore conducted through seeking to reveal the potential new approaches towards creating alpha, build portfolios, manage, trading costs, and assess risk in all the investment operations. Question 2 Exhibit 3 provides a useful tool for understanding the various characteristics of the stocks included in the different funds in Numeric Investors (Harvard Business School, 1997).

This is because it helps in structuring the portfolio in order to deliver long term results that are solid to realize the underlying fundamentals of Numeric’ s which are significantly important. The exhibit allows linking of the various ideas necessary towards establishing a solid portfolio. Numeric Investors investment objective is to develop long term capital preservation through the integration of investments in such areas as “ money market instruments, government and corporate bonds, equities, bonds convertible into common stock, preferred shares, warrants and other fixed-income and equity-linked investments” , that may encompass though not limited to such instruments as the stock options or equity swaps, in a well-balanced asset allocation intended for inflation adjustments into the growth of capital (Harvard Business School, 1997).

The Portfolio is also likely to invest substantially in both fixed income and equity securities in the broader investment options. Exhibit 3 also shows how the portfolio seeks to achieve its investment goals by investing mainly in common stock and other equity and equity-related securities that include but are not limited to convertible bonds, depository receipts, unleveraged participation notes that are designed to provide a return directly linked to the performance of a particular security, options and swaps that are listed, traded or traded on recognized markets and are related to a global emerging area (Harvard Business School, 1997).

The exhibit determines whether a particular security issue relates to a global emerging region, the quantitative investment manager may have regard not only to the principal trading market for the stock or the place or integration of the issuer but also the region of its chief activities and business interests of the clients, revenue and location of its important assets.

The portfolio can as well invest the remainder in markets that can be found outside global emerging regions on specific investment options.

Reference

Harvard Business School. Numeric Investors L.P.1997.
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