To pass this unit (requires a Standardised Numerical Grade of 50 or better) the student must pass the final examination.

CLASSES

Face-to-Face Teaching: Generally 20 hours

Timetable: Detailed timetable for classes are on the Centre’s web site www.mafc.mq.edu.au

Consultation Times: 

Students who wish to contact any of the teaching staff may do so through:

• The Unit’s iLearn site, in relation to general queries (so that all students may benefit); or 
• Individual consultation with the lecturer by email in the first instance, if necessary.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Nil

Additional Readings: 

• Case study materials are supplied. Required readings are included in the notes.
• Additional discussion data will be placed on iLearn. 
• Students should assume these materials, readings and data are not examinable unless otherwise advised.

Lecture Notes: Available in printed form and electronically via iLearn. 

Study Problems: Students are required to work systematically through suggested technical examples. These examples will not be collected but they will help you prepare for the exams. 

Pre-Unit Materials: Information papers on statistics, regression, accounting and other material may be found at http://www.mafc.mq.edu.au/applications/minimum-knowledge-requirement/pre-course-materials1/. Students should work through this material prior to commencing the degree.  The material will remain a useful reference as students progress through the program.

Useful Article References: 

• Introductory articles are included in the notes and form part of the pre-Unit assignment.
• Other articles are also included in the notes and on iLearn.
• The lecturer will advise which articles are examinable.

Calculators: In examinations, hand held calculators are permitted. Mobile phones and computers are not permitted.

Assumed Knowledge: Mathematical content

• Finance has a high level of numerate content.  Consequently this Unit is, in parts, mathematical and arithmetical.  As an indication of the level of algebra required, students should find the following problem easy to solve:

                                                                                Solve for Z₅:   $1,000 = $681.20(1+Z₅/2)¹⁰

• Occasionally the Unit dips into the differential calculus.  As an indication of the level of calculus required, Students should be able to interpret the following equation:

                                                                                D = - ((1+y) / P) (ΔP/Δy)

• Students should look at the Web link below to obtain notes on the minimum mathematical and statistical knowledge required to undertake the Master of Applied Finance degree: http://www.mafc.mq.edu.au/applications/minimum-knowledge-requirement/pre-course-materials1/

Assumed Access: Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site: 

• Found by logging on to iLearn ilearn.mq.edu.au, then clicking on Hedge Funds.
• This is where you will find forums, downloadable resources and links to important pages. 
• The forum allows you to communicate with other students and lecturer(s) and may provide supplementary material. 
• You are requested to post your questions on the forums at least 24 hours prior to the assignment submission date or the examination date. Questions posted after that time may not be answered. Do not leave your questions to the last few days. 

Important Notice: 

• It is important that you familiarize yourself with the Unit’s iLearn site. 
• Students should check the Unit’s iLearn site regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions. 

​

Bev Durston is an award winning and energetic seasoned investment professional with over 25 years’ experience.  She has implemented investment solutions for Superannuation Funds, Sovereign Wealth Funds and Commercial Fund managers in Australia, Singapore and the UK.

She now manages an advisory business for institutional clients, Edgehaven Pty Limited which advises on investing, manager selection, scheme design, portfolio construction and risk management.   Her clients include Australian and UK Superannuation funds, Not for Profit bodies and a Retirement Incomes Solution Provider.  She is also an Honourary Fellow of Macquarie University and teaches the Hedge Fund elective for their Masters of Applied Finance Program.

Her previous roles have encompassed the entire spectrum of asset classes including traditional and Alternative Assets and Strategic Asset Allocation.  Prior employers include Commonwealth Super Corporation, Sunsuper, the Government of Singapore Investment Corporation (GIC), BT Funds Management and British Airways Pensions. 

Bev has a first class Banking and International Finance degree from CASS in London, a Masters of Applied Finance from Macquarie University, Sydney and professional Trustee qualifications. 

She was selected by aiCIO for the top 100 CIO Global Power listing and is a contributor to Cuffelinks newsletter on investing. Bev has spoken at industry conferences both in Australia and overseas on Alternative assets, the obsession with liquidity in Australian Superannuation funds and the DB versus DC retirement experience for members. 

Research interests include:

• Providing adequate retirement income projections to individual members;
• Management of investment funds with an income objective; and
• Non-traditional, diversifying strategies for long term investing. 

David is currently the Chief Investment Officer of Auscoal, a large industry Superannuation Fund.  There he is responsible for asset allocation and manager selection across all of the funds under management as well as advising on the investment options offered to members in accumulation and retirement.  Prior to this he was the founder of St Davids Rd Advisory, an independent advisory firm specialising in the areas of finance and investments.  His firm consulted primarily to wholesale investors, asset managers and corporate organisations across a range of different areas including hedge funds, portfolio and risk management, strategy and governance.

Prior to establishing St Davids Rd Advisory David spent 12 years at Colonial First State Global Asset Management . The last 8 years of that time was spent establishing, managing and winding up their Fund of Hedge Fund business.  At its peak this business managed $540m and had 10 investment staff across Sydney and London.  David ran this division for the last 6 years.  He also spent 6 months in Zurich working with Harcourt Investment Consulting, who provided investment consulting services to CFS. 

David has a Bachelor’s degree in Mathematics, from the University of Newcastle, with majors in applied mathematics and statistics. He also holds a Master of Applied Finance degree and is an Honorary Fellow of Macquarie University, where he coordinates and lectures the Hedge Fund elective for the Masters of Applied Finance course.  David is a part-time PhD candidate at UNSW where his research is focused on multi-period portfolio construction.

In 2010 David was awarded a Lifetime Achievement Award for Contribution to the Hedge Funds Industry at the Australian Hedge Fund Awards.

This Unit Guide may be subject to change. The latest version is on the Centre’s web site www.mafc.mq.edu.au.

Students should read the Unit Guide carefully at the start of semester.  It contains important information about the Unit.  If anything is unclear, please consult one of the unit lecturers.  

Welcome to this Unit.  We hope you find it exciting and informative.  We believe that hedge funds are one of the most interesting areas in finance.  Consider the following:

• Hedge funds began because people thought they had better opportunities to make money and/or manage their risk better if they were not restricted by the more stringent rules of the mutual fund structure and regulations.  Logically, one would expect these managers to be more creative and innovative in the way they manage their money as they have more flexibility.

• The universe of hedge fund strategies encompass those strategies typically employed by traditional fund managers (eg. Equity and bond investment), but also strategies more commonly associated with investment banks (eg. Convertible arbitrage, merger arbitrage, and so on)

• Hedge funds have extra risks for investors.  For example:
  • They are not regulated
  • They often have low liquidity
  • They often have low transparency
  • They often apply leverage
  • They often invest in illiquid securities

• There are many who believe in hedge funds and many who are cynical about hedge funds
• Hedge funds have experienced substantial amounts of press, both good and bad and continue to do so
• Many of the great investors of modern times operate hedge funds.  Think Soros, Robertson, Paulson etc.

• Many of the great disasters in finance have involved hedge funds.  Think LTCM, Amaranth, Madoff!

As a result this Unit should provide plenty of colour, conversation and hopefully debate.  We encourage class participation and some of your assessment is based on this.

The Unit is not intended to make the Student a specialist in all aspects of hedge funds, but rather to give an overview of the wide range of strategies employed and key industry concepts.

Enjoy!

Bev Durston & David Bell

University Policy on Grading:

• Macquarie University’s Academic Senate has established a Grading Policy available at http://www.mq.edu.au/policy/docs/grading/policy.html. Your final result will include: 
  • A grade ranging from Fail to High Distinction; and
  • A Standardised Numerical Grade (SNG). A SNG is not a summation of the individual assessment components, but is allocated on the basis of the performance in all assessment items, providing the examination component is passed.
• It is important to note:
  • The Policy does not require that a minimum or maximum number of students are to be failed in any unit; 
  • Grades will not be allocated to fit a predetermined distribution; and
  • The process of allocating SNGs does not change the rank order of marks among students who pass the unit. 

Specific Unit Grading: 

•  To pass this unit (requires a Standardised Numerical Grade of 50 or better) the student must pass the final examination.
• All final grades in the Applied Finance Centre are determined by a grading committee and are not the sole responsibility of the unit convenor.
• The core criteria used to assess student work in this unit are: 
  • Knowledge and understanding: Understanding key ideas, knowledge and use of concepts.
  • Application: Ability to apply theoretical ideas and frameworks in practice and in a critically reflective way. 
  • Reasoning and analysis: Ability to analyse, use critical reasoning and principles to formulate a position, balancing theory and personal reflection. 
  • Professional literacy and research: Understanding of professional factors (language and landscape) and ability to undertake appropriate research. 
  • Communication and presentation: Ability to communicate and present effectively (written and oral, as relevant).
  • Use of mathematical and statistical ideas: Ability to use mathematical and statistical ideas, methods and formulae appropriately. 
• Performance in relation to each of these criteria are assessed against the University’s grading descriptors:

Review of Grade and final examination Script viewing:

• A student who has been awarded a final grade for a unit and who does not believe it is an accurate reflection of their performance, and has grounds for such a claim and can demonstrate those grounds, may apply to have their grade reviewed. 
• For information on requesting a review of grade and/or viewing your final exam script, please refer to the University’s Grade Appeal Policy at http://www.mq.edu.au/policy/docs/gradeappeal/policy.html and MAFC Program Rules & Procedures at http://www.mafc.mq.edu.au.