Academic study finds hedge funds more likely to sail into the sunset than go down in blaze of glory

Jan 14th, 2009 | Filed under: Academic Research, Hedge Fund Industry Trends, Today's Post | By:
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A variety of euphemisms are often used to describe hedge funds that close their doors from “going under,” to “collapsed,” to “failures,” to “forced into liquidation.“  While colorful imagery is engaging, the reality is actually much more boring.  As we have written before, most hedge funds that cease operations do so by simply sailing off into the sunset, not going down in a blaze of glory. More…

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  1. The fact that the hedge fund becomes concerned about more and more redemption is unavoidable..the investors haven’t got their due rights of knowing where their money are invested. especially when the investments are really huge some and didn’t showed the returns expected. Transparency, Strict regulations are some of the things which we should act on to see the hedge fund industry cross this hurdle.

  2. While I agree with increased transparency, I disagree with more regulations. Keep hedge funds available only to sophistcated investors who have the resources to make investment decisions – based on increased transparency from the managers. Now that everyone is more aware of both sides of the balance sheet both parties can discuss liquidity matching. Notice that private equity funds aren’t struggling as much.

  3. We must be clear about what we mean by transparency. We are a hedge fund of funds and we get detailed portfolio information, including position level transparency from some, at least monthly from all of our underlying funds. That information should not be available to the general public, only to investors and, generally, to qualified investors. Regulators also already have access to this data as while many funds are not regulated, all of their market activities are. If a fund will not freely provide enough information to investors to understand and feel comfortable about what they are invested in, DON’T INVEST.

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