Hf - Case Synopsis

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As a member of the HF’s Investment Committee would you make the 5% commitment to Sirius V? You must provide arguments in favor and arguments against the proposal to support your decision.What are the advantages and disadvantages of investing in Sirius V, the global distressed investment fund (Exhibits 10, 11, 12a and 12b)?Should HF pledge up to 5% of the endowment to Sirius V? Case description: Investment Policy at the Hewlett Foundation Purpose of the case To provide students with the opportunity to discuss the design of asset allocation policies for long-term investors, the design and implementation of return overlay (or “alpha transport”) strategies, evaluation of performance and risk exposure of hedge fund strategies, portfolio diversification, and investments in non-liquid assets. Objectives After completing this case students will understand: 1. Asset allocation design 2. Design of overlay portfolios, also known as “alpha transport” or “portable alpha” strategies, to separate search from alpha from risk exposure. 3. The role of hedge funds in investors’ portfolios 4. Portfolio undiversification 5. The benefits of specialization versus the benefits of portfolio diversification. 6. The use of geometric mean returns and arithmetic means returns as forecasts of expected returns al long horizons. Case Synopsis This case examines the asset allocation decisions that the William and Flora Hewlett Foundation (HP) is considering in early 2005. After careful analysis of the financial challenges and investment opportunities the foundation is currently facing, the chief investment officer and his team are about to make three asset allocations proposals to the foundation committee which, if approved will substantially change the foundation’s investment portfolio. • First Proposal Adopt a new allocation policy to reduce considerably the

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