Alternative investments are gaining more popularity in recent years. As the interview questions get more sophisticated, it’s crucial for candidates to prepare beforehand. This article will provide an overview of alternative investments interview questions, explain the rationale, give examples, and provide tips to help candidates demonstrate their expertise. By reviewing the core concepts of alternative investments and practicing mock interviews, candidates can stand out and be better positioned for landing the job.
Understand the role and your motivation
Many alternative investment firms will ask candidates why they are interested in this space and what appeals to them about the role. Research the firm’s specific strategies and be able to articulate what excites you. For example, if the firm focuses on private equity, you may be attracted to working closely with management teams to improve operations. Prepare a story explaining your interest and motivation.
Show your investing philosophy and risk management
You may get questions probing your beliefs around portfolio construction, risk management, and how alternative investments can enhance traditional portfolios. Be ready to discuss concepts like modern portfolio theory, risk parity, crisis risk offset, and risk premium. Have an informed perspective on leveraging alternatives for diversification, reduced volatility, lower correlation to traditional assets, and absolute returns.
Demonstrate market awareness and asset class knowledge
Firms want to know you have knowledge of recent trends and can hold an intelligent conversation around alternative investments. Be prepared to discuss major asset classes like private equity, venture capital, hedge funds, real estate, infrastructure, and commodities. Follow industry news sources to show awareness of deals, fund launches, regulatory changes, and investment themes.
Explain valuation methods and portfolio fit
Many questions will test your technical abilities in alternative investment valuation and analysis. Brush up on concepts like comparables, discounted cash flow, and net asset value. Also be ready to give informed opinions on how specific strategies like venture capital or long/short equity can complement a portfolio versus substitute other assets.
Highlight your transferable skills
Even if you lack direct alternatives experience, highlight transferable skills from your background. Areas like financial modeling, valuation, due diligence, portfolio analytics, and risk management are crucial. Provide concrete stories demonstrating your technical abilities and aptitude for learning quickly.
Preparing for alternative investment interviews requires dedication and practice. By researching the firm and role, understanding key technical concepts, and honing your stories, you will stand out from other candidates.