Returns of so-called “dead” hedge funds found not to be that bad after all
Nov 19th, 2008 | Filed under: Hedge Fund Industry Trends, Today's Post
A few weeks ago we wondered if reports of the death of the “hedge fund model” were true or whether hedge funds had just been knocked unconscious for a while. Apparently we weren’t the only ones curious about the hedge fund afterlife. On Halloween, of all days, researchers in the US and Germany (re-)released a study on the average returns of “dead” hedge funds.
“Returns of dead funds?” you ask. Yes indeed. James Hodder, Jens Carsten Jackwerth and Olga Kolokolova have developed a methodology they say allows them to calculate the returns of hedge funds that have stopped reporting to hedge fund databases (often inaccurately referred to as “dead”.)
Based on media reports regarding the number of hedge funds in the world, you might think that any fund that ceases to voluntarily report their returns has simply “blown up“. But the authors of this paper say that only a fifth of funds that stop reporting actually say that it’s because they were liquidating. Five percent say they have simply closed to new investments and 76% don’t say why they have stopped reporting.
To continue reading this article please login (at the right) or click here to learn more about accessing our archives.
Related Posts
- Advisors Survey: Hedge funds are dead. Long live hedge funds!
- Study finds many hedge funds simply hold back liquidity to power returns
- AllAboutAlpha Exclusive: An interview with one of the witnesses called to testify at the Congressional hedge fund hearings this week
- Hedge funds should rue the day that the term “absolute returns” was coined
- Unscrambling the performance fee egg yields new insights into hedge fund returns
