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Did You Know?

This week's Did You Know

The Chicago Board of Trade (CBOT) was established in 1848.

Previous week Did You Knows

09/19/2011

Alternative investments can be thought of investments outside of the traditional allocations of stocks, bonds and cash.

09/12/2011

The first hedge fund was created in 1949.

09/05/2011

Event-driven strategies seek to take advantage of over- or underpriced stocks before or after a major corporate event, such as a bankruptcy, merger, acquisition or spinoff.

08/29/2011

The term "swap" was first used in the 1980s. The first swap was put into place by David F. Swensen, who was then senior vice president at Lehman Brothers and is now the CIO of Yale University.

08/22/2011

A derivative is a risk transfer contract. Its value results from the value of an underlying asset, such as a physical commodity, an interest rate, a company's stock, a stock index or a currency.

08/15/2011

A plain vanilla swap occurs when one party trades at a fixed rate and one party trades at a floating rate.

08/08/2011

A swap is a confidentially agreed upon contract between two participants (or participant groups) to swap cash flows on set dates during the agreed-upon duration of the contract.

08/01/2011

Inverse funds (also called "short" funds) seek to provide the reverse performance of their benchmark indices. Inverse funds can provide a way for investors to profit from, or at least hedge their exposure to, failing indices.

07/25/2011

The term "venture capital" was coined by Benno C. Schmidt, Sr., a managing partner at J.H. Whitney & Co., the oldest American venture capital firm. The term was a shortening of the word "adventure."

07/18/2011

In 1946, the American Research and Development Corporation (ARDC) and J.H. Whitney & Company became the first venture capital firms in the United States.

07/11/2011

A futures contract is a written contract to buy or sell a set amount of a commodity or financial instrument at a fixed price set on an upcoming day.

07/04/2011

Options are contracts that give the buyer the privilege to buy or sell a security, like stocks, at a set price and a set time. There is no requirement on the part of the buyer to purchase or trade off options.

06/27/2011

Many hedge funds are notorious for their lack of transparency, and in 2009 the Hedge Fund Transparency Act was proposed, which would require certain disclosure compliance for hedge funds.

06/20/2011

In economics, transparency generally means what products, services or capital assets are available, at what price and in which location.

06/13/2011

The inventor of ETFs, Nathan Most, was 73 when he developed the idea. Mr. Most's first career was trading in commodities like safflower seed and coconut oil.

06/06/2011

Mutual fund prices do not change over the course of a trading day, but ETFs may be bought and sold and can be bought with leveraged money and sold short.

05/30/2011

The similarity of mutual funds and ETFs is that they both represent a pool of investments in which people may buy shares. But, unlike mutual funds, ETFs can also be traded like stocks.

05/23/2011

Commodities are basic goods that are interchangeable with goods of the same type. Examples are petroleum, notebook paper, milk or copper.

05/16/2011

The creation of the first hedge fund is widely accredited to Australian sociologist, humanitarian and author Alfred Winslow Jones. Jones was a Harvard graduate, Fortune magazine editor and Peace Corps volunteer.

05/09/2011

"Delta neutral" is a finance term that refers a position of a hedged equity. When a portfolio is in delta neutral, it remains stable despite small changes in the value of the underlying security.

05/02/2011

Convertible arbitrage is a market-neutral investment strategy often associated with hedge funds. This market strategy looks for error in pricing then buys the underpriced investment and sells short the overpriced investment.

04/25/2011

The Investment Company Act of 1940 is an act of Congress that aims "to mitigate and...eliminate the conditions...which adversely affect the national public interest and the interest of investors." Specifically, the act regulates the relationship between investment companies and securities exchanges.

04/18/2011

The now defunct International Commerce Exchange was the first entity to trade currency futures, beginning on Apr. 23, 1970, two years before the Chicago Mercantile Exchange, which began trading currency futures in 1972.

04/11/2011

A dedicated short-bias occurs in hedge funds when the investment takes more short positions than long positions. It is used when it is believed that the funds will decline in price.

04/04/2011

One of the first short-sell exchanges occurred in February 1609, when Isaac Le Maire, an original subscriber to the Dutch East India Company, formed a secret association, a "Groote Companie," to short the East India Company's shares in anticipation of a rival French-chartered trading firm.

 

 

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The alternatives strategies and asset classes mentioned are not suitable for all investors. Many alternative strategies use sophisticated and aggressive investment techniques such as leveraging, short selling and derivatives. The more you invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. The use of short selling involves increased risks and costs. You risk paying more for a security than you received from its sale. Theoretically, stocks sold short have the risk of unlimited losses. The use of derivatives such as futures, options and swap agreements may expose an investment to additional risks that it would not be subject to if you invested directly in the securities underlying those derivatives. Additionally, certain alternative strategies tied to hard assets such as commodities, currencies and real estate, may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates or factors affecting a particular industry, commodity or currency, -such as droughts, floods, weather, livestock disease, embargos, tariffs and international economic, political and regulatory developments. No investment strategy can guarantee a return in a declining market. Additionally, an investor could lose all or a substantial amount of their investment. For more information about these strategies and their risks please consult your financial advisor.

This material is not intended to be a comprehensive overview of the subject matters discussed. It is intended to be general in nature and should not be construed as investment advice or a recommendation of any specific security or strategy. Before investing in any of the investment products or strategies discussed, consult with your financial advisor to determine if they are appropriate for your objectives, risk tolerance, income level and investing time horizon.

Rydex SGI offers funds with investment strategies similar to those referenced on GetAlts.com.

Read the fund's prospectus and summary prospectus (if available) carefully before investing. It contains the fund's investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at www.rydex-sgi.com or call 800.820.0888.

Rydex|SGI funds are distributed by Rydex Distributors, LLC (RDL). Security Investors, LLC (SI) is a registered investment advisor, and does business as Security Global Investors® and Rydex Investments. SI and RDL are affiliates and are subsidiaries of Security Benefit Corporation, which is wholly owned by Guggenheim SBC Holdings, LLC, a special purpose entity managed by an affiliate of Guggenheim Partners, LLC, a diversified financial services firm with more than $100 billion in assets under supervision.

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