Hedge funds
5 important questions on Hedge funds
What are hedge funds, name 6 characteristics?
2) subject to minimal regulation.
3) Often only open to wealthy and institutional investors
4) Lock-up period in which investment cannot be withdrawn (could be several years)
5) illiquid assets
6) More risky strategies (derivatives, futures)
What is the most popular fee structure in hedge funds?
What is the high water mark?
- Higher grades + faster learning
- Never study anything twice
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What can lead to survivorship bias in hedge funds?
What are possible sources of superior performance(6)?
- Skilled managers
- Illegal insider trading
- Exposure to omitted risk factors with positive risk factors, e.g. liquidity
- Changing factor loadings : could be that fund has different exposure to a certain beta during sample period
- Survivorship bias
- backfill bias: they only choose to report returns when it is going good. Not obliged to do so
The question on the page originate from the summary of the following study material:
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