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Some Facts about Hedge Funds

  • Harry M. Kat

Hedge funds promise investors the best of both worlds: superior performance and high diversification potential combined into one. This article discusses a number of recent findings that show that the case for hedge funds is less straightforward than often portrayed. A close look at the available hedge fund return data reveal substantial bias which makes interpretation complex. When using traditional performance measures, this will cause investors to overestimate the expected return and underestimate the risk of hedge funds. As a result, they are likely to overinvest in hedge funds.

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File URL: http://www.world-economics-journal.com/Contents/ArticleOverview.aspx?ID=104
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Article provided by World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE in its journal World Economics Journal.

Volume (Year): 3 (2002)
Issue (Month): 2 (April)
Pages: 93-123

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Handle: RePEc:wej:wldecn:104
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