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Alternative investments versus indexing: An evaluation of hedge fund performance

Sponsored By Vanguard

Topics:
Finance & Risk Management > Hedging

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Abstract:
Investors have become more interested in hedge funds in recent years, attracted by the opportunity to earn returns that are independent of the returns from equity and fixed income markets. This has been lucrative for hedge fund managers, who command hefty fees. But has it been profitable for investors?

This paper evaluates whether hedge funds generate superior risk-adjusted returns and how hedge fund performance compares with that of low-cost long-only indexes.The author concludes that, on average, investors in most categories of hedge funds receive neither the promised returns nor the diversification benefits.
DETAILS
Sponsored by: Vanguard
Released: July 31, 2009
Length: 4 pages
Format: PDF (722 kb)
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