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Death and the life hereafter: A study of the subsequent hedge funds

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  • Yao, Juan
  • Wu, Bochen
  • Gao, Yang

Abstract

Identifying skilled managers is crucial for investors. In this paper, we present a sample of hedge fund managers who launched new funds after their previous funds were closed or stopped reporting. We investigate the characteristics and performance of such managers’ subsequent funds (‘new’ funds) in comparison to their prior funds (‘old’ funds). After controlling for various fund characteristics and a peer group benchmark, we conclude that subsequent funds run by the same manager perform better than their prior counterpart by 1.2% per month on average. We conjecture that the outperformance is due to improved manager skills.

Suggested Citation

  • Yao, Juan & Wu, Bochen & Gao, Yang, 2021. "Death and the life hereafter: A study of the subsequent hedge funds," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320310850
    DOI: 10.1016/j.frl.2020.101704
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    References listed on IDEAS

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    Cited by:

    1. Huang, Wenli & Liu, Wenqiong & Lu, Lei & Mu, Congming, 2023. "Hedge funds trading strategies and leverage," Journal of Economic Dynamics and Control, Elsevier, vol. 149(C).

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    More about this item

    Keywords

    Hedge funds; Performance measurement; Factor models; Subsequent funds;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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