Finance Glossary
Alternative management
What is alternative management?
Alternative management is defined as management independent of indices and market performance.
It is characterized by an absolute performance objective under predefined risk conditions.
This type of management relies on strategies and tools that are both diversified and complex.
Managers invest in a wide range of assets: listed or unlisted stocks, bonds, currencies, indices, real estate, or even the art market.
They use varied assets to diversify the fund (for example, the dollar is unlikely to fluctuate in the same proportions and in the same direction as the art market).
One of the techniques used in alternative management is short selling.
This technique involves anticipating a decline in a security by selling it without owning it, then repurchasing it at a lower price to deliver it to the buyer.
Alternative management strategies:
- The "long/short equity" strategy combines the purchase of stocks considered undervalued and the short selling of stocks considered overvalued;
- The "event-driven" strategy consists of selecting securities issued by companies in special situations (merger, acquisition, restructuring...);
- The "arbitrage" strategy seeks to take advantage of market inefficiencies and opportunities related to a price or rate disparity between two closely interdependent assets;
- The "trading" strategy aims to exploit major market trends.
It is therefore a management approach that, by nature, remains reserved for "informed" investors (institutional investors, "professional" investors...).