What Hedge Funds Really Do: An Introduction to Portfolio Management by Philip J. Romero and Tucker Balch.
Great book to learn the basics; highly recommended.
It is also common for hedge funds to provide lower cumulative returns compared to the bench mark, but also with significantly reduced volatility. This relative performance is common to the claims of many hedge funds; their strategies have lower volatility and lower returns in the rising markets, presumably because of the performance drag cause by hedges. But their risk-adjusted return as-measured by their Sharpe ratio or information ratio-is superior to unhedged long-only strategies.
Great book to learn the basics; highly recommended.
It is also common for hedge funds to provide lower cumulative returns compared to the bench mark, but also with significantly reduced volatility. This relative performance is common to the claims of many hedge funds; their strategies have lower volatility and lower returns in the rising markets, presumably because of the performance drag cause by hedges. But their risk-adjusted return as-measured by their Sharpe ratio or information ratio-is superior to unhedged long-only strategies.
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