scholarly journals Returns to Active Management: The Case of Hedge Funds

2014 ◽  
Author(s):  
Maziar Kazemi ◽  
Ergys Islamaj
Keyword(s):  
Hedge Funds ◽  
Active Management

Current Hedge Fund Debates and Controversies

2017 ◽  
Author(s):  
Dianna C. Preece
Keyword(s):  
Insider Trading ◽  
Hedge Funds ◽  
Conflicts Of Interest ◽  
Hedge Fund ◽  
Securities And Exchange Commission ◽  
Active Management ◽  
Wall Street ◽  
Net Worth ◽  
Market Participants ◽  
Alternative Beta

The hedge fund industry has grown to nearly $3 trillion over the last 20 years. High-net-worth individuals and institutional investors expect high returns and low correlation with traditional asset classes in exchange for the fees paid. The standard fee structure is “2 and 20,” 2 percent of assets under management and 20 percent of profits, representing high fees for active management. Hedge funds are largely unregulated and somewhat mysterious. As a result, they are the subject of debates and controversies among market participants and policymakers alike. Debates focus on fee structures, alpha versus alternative beta, weakening returns, activist investors, and leverage. The Securities and Exchange Commission has targeted hedge fund misconduct and malfeasance, pursuing perpetrators of fraud, insider trading, and conflicts of interest in the industry. Several high-ranking Wall Street hedge fund executives have been charged with, and in some cases convicted of, breaking securities laws.

Hedge Funds and the Active Management Industry

2007 ◽  
Vol 10 (2) ◽  
pp. 43-53 ◽  
Author(s):  
Neil Brown ◽  
Vineet Budhraja ◽  
Rui J.P. de Figueiredo ◽  
Ryan Meredith
Keyword(s):  
Hedge Funds ◽  
Active Management

scholarly journals Returns to Active Management : The Case of Hedge Funds

2014 ◽  
Vol 2014 (1112) ◽  
pp. 1-24
Author(s):  
Maziar Kazemi ◽  
◽  
Ergys Islamaj
Keyword(s):  
Hedge Funds ◽  
Active Management

Investor behavior: hedge fund returns and strategies

2017 ◽  
Vol 9 (1) ◽  
pp. 14-42 ◽  
Author(s):  
Andres Bello ◽  
Jan Smolarski ◽  
Gökçe Soydemir ◽  
Linda Acevedo
Keyword(s):  
Hedge Funds ◽  
Hedge Fund ◽  
Management Style ◽  
Active Management ◽  
Warning Sign ◽  
Content Type ◽  
Market Sentiment ◽  
Irrational Behavior ◽  
Market Fundamentals ◽  
Hedge Fund Returns

Purpose The purpose of this paper is to investigate to what extent hedge funds are subject to irrationality in their investment decisions. The authors advance the hypothesis that irrational behavior affects hedge fund returns despite their sophistication and active management style. Design/methodology/approach The irrational component may follow a pattern consistent with the observed hedge fund returns yet far distant from market fundamentals. The authors include factors beyond the original version of capital asset pricing model such as Fama and French and Carhart models, as well as less stringent models, such as APT and Fung and Hsieh, to test whether these models are able to capture the irrational nature of the residuals. Findings After finding that institutional irrational sentiments play a role in hedge fund returns, we note that the returns are not completely shielded against irrational trading; however, hedge fund returns appear to be affected only by the irrational component derived from institutional trading rather than that emanated from individuals. Research limitations/implications Different sources of irrationality may have asymmetric effects on hedge fund returns. Using a different set of sophisticated investors along with different market sentiment proxies may yield different results. Practical implications The authors argue that investors can use irrational beta to gauge the extent of institutional irrational sentiments prevailing in markets for the purpose of re-adjusting their portfolios and therefore use the betas as an early warning sign. It can also guide investors in avoiding funds and strategies that display greater irrational behavior. Originality/value The study advance the idea that the unexpected, hereafter irrational, component may follow a pattern consistent with the observed hedge fund returns, yet different from market fundamentals.

scholarly journals Institutional Investors and Foreign Exchange Risk

2015 ◽  
Vol 05 (03) ◽  
pp. 1550013
Author(s):  
Timo Korkeamaki ◽  
Danielle Xu
Keyword(s):  
Mutual Funds ◽  
Foreign Exchange ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Active Management ◽  
Foreign Exchange Risk ◽  
Exchange Risk ◽  
Foreign Exchange Exposure

We study institutional appetite for stocks with FX exposure, and find variation among institution types. Institutions that are by their nature more likely to engage in active management of foreign exchange risk in their portfolio, namely mutual funds and hedge funds seek stocks with foreign exchange exposure. Institutions that are constrained by regulation tend to avoid foreign exchange exposure.

Sign in / Sign up

Export Citation Format

Share Document