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Investor Irrationality and Closed-end Hedge Funds

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  • Dietiker, Oliver

    ()

Abstract

The present study assesses the rationality of investors who pay large sums to hedge fund managers for their services. For my analysis I use a sample of closed-end funds which invest their capital in one or more open-ended hedge funds. The results imply that investors rationally exploit the available information when deciding whether to engage in the initial public offering of a new closed-end fund. However, I also find evidence that investors react with a burst of irrational pessimism to the worsening economic conditions in the second half of 2008.

Suggested Citation

  • Dietiker, Oliver, 2010. "Investor Irrationality and Closed-end Hedge Funds," Journal of Financial Transformation, Capco Institute, vol. 30, pages 57-65.
  • Handle: RePEc:ris:jofitr:1441
    as

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    More about this item

    Keywords

    investor irrationality; hedge funds; closed-end funds;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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