Do hedge fund returns add up?

Sat Nov 1, 2003

In the second part of an investigation into the risks and rewards of hedge fund investing we look at returns and conclude that the industry is doing pretty well

T he best performing hedge funds have built an enviable reputation for providing their investors with more stable returns, greater diversification and lower risks than conventional equity and other investments. But critics often suggest that hedge fund returns are literally too good to be true and that once 'survivorship bias' is stripped out, the returns are far less impressive.

They also say that hedge funds don't even do what they claim to do and make money in down markets. They point to returns over the recent bear market and rather unkindly say that hedge funds are "cash minus fees". While these criticisms are not without foundation, what is often forgotten is that they are a whole lot better than other comparable...

ISSN: 2151-1845 / CDC10004H

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