Performance and ability to grow assets: mixed findings
Fri Jun 3, 2011
Hedge funds that perform well do have a greater ability to attract new assets and the correlation gets stronger the larger a fund becomes – though this relationship between performance and asset growth broke down almost completely during and after the financial crisis, according to a new study carried out by HedgeFund Intelligence and sponsored by Citi
By Neil Wilson and Damian Alexander
Hedge fund performance is indeed related to the ability to grow assets, but the relationship is not nearly so consistent or so strong over time as one might suppose, according to a new piece of research conducted using the HedgeFund Intelligence database.
The research, which was commissioned with sponsorship from Citi, set out to test the widely held notion that there should be a clear relationship or correlation between hedge fund performance and asset growth. To do so, it examined the performance and asset growth patterns over the past 10 years of a representative sample of funds (of varying strategies and asset sizes from the two biggest regions of the hedge fund world – the US and Europe) selected from the total of more than 14,000 live and liquidated funds in the HedgeFund Intelligence database.
The research discovered, as expected, that there has been...
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