An evolutionary view of hedge funds’ “fundamental problems”

Apr 5th, 2011 | Filed under: Hedge Fund Industry Trends, Today's Post | By:
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Critics of the hedge fund industry point to an oft-cited (and in our view, somewhat tired) list of grievances:  lack of liquidity, opacity, potential conflicts of interest and questionable alpha-generation.

You may or may not think any of these claims has legs.  But despite whatever your views are on these charges, it can only be helpful to look back into the evolutionary history of the hedge fund business model itself to gain some insight.  That’s what Yang Cao, Joseph Ogden and Cristian Tiu of the University at Buffalo did in a paper to be presented at a symposium in nearby Toronto later this week (note to CAIA members in Toronto: The European Financial Management Conference on Alternative Investments is being held at York University.  CAIA is co-hosting a kick-off dinner and panel discussion as part of the event on April 7th – click here for more on that dinner.)

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