Hedge Funds: Myths & Facts
Apr 22nd, 2007 | Filed under: Alternative Beta & Hedge Fund Replication, Hedge Fund Industry TrendsBy: Ed Easterling, Crestmont Research
Published: April 10, 2007
Hat tip to Opalesque for highlighting this report containing 15 hedge fund “myths”. Ed Easterling, author and prof at Southern Methodist University’s Cox School of Business, hits the nail on the head with this observation about the accusations commonly leveled against hedge funds:
“Never has an industry so extensively studied by ‘experts’ produced such a surplus of myths, misunderstandings, and half-truths. Many of these myths could easily be clarified with a call or two to knowledgeable industry professionals. Too often, a seemingly logical statement that sounds-good-when-you-say-it-fast becomes accepted conventional wisdom despite the reams of evidence weighted against it.”
Why all the anti-hedge fund hyperbole? According to Easterling, there are three sources:
- “…academics that are misapplying principles of finance and markets to hedge funds or that are repeating seemingly-logical perspectives,
- “…high-profile observers from outside the hedge fund industry that lack actual knowledge, and
- “…critics of the hedge fund industry that relish in attempting to discredit it.”
We won’t list out all 15 myths here. But the following 5 are worthy of particular note:
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I actually wrote a not so different article for the Albourne Village last week entitled “Top 10 Hedge Fund Myths.” Here is a link if anyone is interested:
Top 10 Hedge Fund Myths
http://richard-wilson.blogspot.com/2008/01/top-10-hedge-fund-myths.html