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The Need for Market Regulations and Hedge Funds Performance

Author

Listed:
  • Carmen CORDUNEANU

    (Faculty of Economics and Business Administration, West University of Timisoara, Romania)

  • Daniela Liliana TURCAS

    (S.S.I.F. IFB FINWEST S.A., Arad, Romania)

Abstract

The contemporary crisis has brought into attention the hedge funds activity, with respect to high performance achieved levels, management techniques employed and high professionalism of the management. Being focused on higher returns to the market indices, hedge funds differ substantially to traditional investment funds through the promoted investment strategies. In Europe, prior to the European Parliament’s Directive on Alternative Investment Funds Administrators (November 2010), hedge funds activity has been the subject of many controversial financial discussions. Alternative investment funds, especially hedge funds, private equity funds and venture capital funds have been held responsible to some extent for the global financial crisis. An increased transparency, through a more rigorous control on their activity, applying common regulations for all investment funds operating in the European area, provides the circumstances for increased financial stability and for a limited risk and increased investor protection workframe. This study considers the need for market regulations on hedge funds activity, while analyzing the defining characteristics of adopted investment strategies and their performance. The analysis is performed using the comparison approach in order to compare hedge funds performance to classic investment funds and market indices performance. The analyzed time period is 2000 – 2010, in terms of managed assets and rates of return achieved, benefits and disadvantages in the investment process.

Suggested Citation

  • Carmen CORDUNEANU & Daniela Liliana TURCAS, 2011. "The Need for Market Regulations and Hedge Funds Performance," Timisoara Journal of Economics, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 4(4(16)), pages 193-204.
  • Handle: RePEc:wun:journl:tje:v04:y2011:i4(16):a01
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    Keywords

    Hedge funds; regulations; investment strategies; compared performance;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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