Topic: Portfolio Allocation in Stocks, Bonds and Hedge Funds. Framework: This finance research paper provides an outlook of Integrating Hedge funds into traditional portfolio (Stocks and Bonds) as well as effects on its diversification and return. It also describes the appropriate allocation of funds in different assets to reach the efficient frontier. The possible ways to get the desired result on the portfolio includes using out- of- the money put option on the hedge funds, adding leverage to the portfolio, investing in managed futures etc. Research questions: Investing in Hedge Funds: Risk, Returns and Performance? Role of Hedge Funds in the diversified portfolio? Possible ways to get the desired result of the portfolio? Hypothesis: H0: It’s not possible to get the desired result while integrating Hedge funds into traditional portfolio. H1: It’s possible to get the desired result while integrating Hedge funds into traditional portfolio.
