Trends and Future Prospects of Hedge Funds

2017 ◽  
Author(s):  
Hunter M. Holzhauer
Keyword(s):  
Hedge Funds ◽  
Hedge Fund ◽  
Historical Context ◽  
Cost Savings ◽  
Short Term ◽  
Fund Managers ◽  
Potential Impact ◽  
Fund Industry

This chapter focuses on new trends in the hedge fund industry. The chapter begins by creating some historical context for the current perception and state of hedge funds. The remainder of this chapter focuses on the following trends and their potential impact on the industry: (1) growth in all areas of the industry, especially in terms of long-term capital flows from institutional investors; (2) uncertainty about growth in the short term; (3) ways hedge funds approach growth; (4) the need for more diversity among hedge fund managers, including more minorities and women; (5) diverging long-term objectives for larger and smaller hedge funds; (6) future cost savings to investors; (7) development of new investment options to address liquidity concerns for investors; (8) new regulations; and (9) the future role of technology in the hedge fund industry.

Portraits of five hedge fund fraud cases

2008 ◽  
Vol 15 (2) ◽  
pp. 179-213 ◽  
Author(s):  
Majed R. Muhtaseb ◽  
Chun Chun “Sylvia” Yang
Keyword(s):  
Asset Management ◽  
Hedge Funds ◽  
Hedge Fund ◽  
Investment Fund ◽  
Good Opportunity ◽  
Content Type ◽  
Fund Managers ◽  
Management Group ◽  
Fund Industry ◽  
Asset Managers

PurposeThe purpose of this paper is two fold: educate investors about hedge fund managers' activities prior to the fraud recognition by the authorities and to help investors and other stakeholders in the hedge fund industry identify red flags before fraud is actually committed.Design/methodology/approachThe paper investigates fraud committed by the Bayou Funds, Beacon Hill Asset Management, Lancer Management Group (LMG), Lipper & Company and Maricopa investment fund. The fraud activities took place during 2000 and 2005.FindingsThe five cases alone cost the hedge fund investors more than $1.5 billion. Investors may have had a good opportunity for avoiding the irrecoverable costs of the fraud had they carefully vetted the backgrounds of the hedge fund managers and/or continuously monitored the funds activities, especially during turbulent market environments.Originality/valueThis is the first research paper to identify and extensively investigate fraud committed by hedge funds. In spite of the size of the hedge fund industry and relatively substantial level and inevitably recurring fraud, academic journals are to yet address this issue. The paper is of great value to hedge funds and their individual and institutional investors, asset managers, financial advisers and regulators.

Fraud against hedge funds: implications to operational risk and due diligence

2020 ◽  
Vol 27 (1) ◽  
pp. 67-77
Author(s):  
Majed R. Muhtaseb
Keyword(s):  
Hedge Funds ◽  
Hedge Fund ◽  
Operational Risk ◽  
Future Research ◽  
Due Diligence ◽  
Law Firm ◽  
Short Term ◽  
Content Type ◽  
Fund Managers

Purpose The loss of an amount in excess of $100m cash deposit can be disruptive to the operations, definitely the liquidity of the hedge fund. Should a hedge fund liquidity position deteriorate, its compromised solvency could impact its vendors, most notably creditors and prime brokers. Large successful hedge funds do make basic mistakes. Lawyer Marc Dreier committed the criminal act of selling fraudulent promissory notes to hedge funds and others. Mr Drier’s success in selling fraudulent promissory notes was facilitated by his accomplices who posed as fake representatives of legitimate institutions. Drier and team presented bogus “audited financial statements” and forged developer’s signatures, and even went as far as using the unsuspecting institutions’ premises for meetings to meet potential notes buyers to further falsely legitimize the scheme. He had the notes buyers send their payments to his law firm account, to secure the money. His actions cost his victims, who include 13 hedge fund managers, other investors and entities, $400m in addition to his law firm’s employees who also suffered when his law firm was dissolved. For his actions, he was sentenced 20 years in federal prison for investment fraud. This study aims to direct hedge fund investors and other stakeholders to thoroughly vet the compliance function, especially controls on cash disbursements, even if the hedge fund is sizable (in excess of $1bn). Investors and even other stakeholders also should place a greater focus on what is usually overlooked issue; most notably the credit quality and authenticity of short-term investments bought by their hedge funds. Design/methodology/approach A thorough investigation of a fraud committed by a lawyer against a number of hedge funds. Several important lessons are identified to professionals who conduct due diligence on hedge funds. Findings The details of the case are very remarkable. This case directs investors’ attention to place greater efforts on certain aspects of operational risk and due diligence on not only hedge funds but also other investment managers. Normally investors conduct operational due diligence on the fund and its operations. Investors also vet fund external parties such as prime brokers, custodians, accountants and fund administrators. Yet, investors normally do not suspect the quality of short-term fund investments. In this case, the short-terms investments were the source of unforeseen yet substantial risk. Research limitations/implications Stakeholders in hedge funds need to carefully investigate the issuer of and the quality of short-term investments that a hedge fund invests in. Future research can investigate the association of hedge fund manager failure with a liquidity position of the fund. Practical implications Investors must thoroughly the entirety of the fund including short-term securities. Originality/value Normally, it is the hedge funds that commit the fraud against investors. In this case, it is the multi-billion hedge funds run by sophisticated fund managers, who are the victims.

Beta Active Hedge Fund Management

2018 ◽  
Vol 53 (6) ◽  
pp. 2525-2558 ◽  
Author(s):  
Jun Duanmu ◽  
Alexey Malakhov ◽  
William R. McCumber
Keyword(s):  
Hedge Funds ◽  
Common Factor ◽  
Explanatory Power ◽  
Hedge Fund ◽  
Superior Performance ◽  
Time Varying ◽  
Fund Managers ◽  
Out Of Sample ◽  
Hedge Fund Performance

We reconsider whether hedge funds’ time-varying risk factor exposures are predictive of superior performance. We construct an overall measure (BA) of fund managers and present evidence that top beta active managers deliver superior long-term out-of-sample performance compared to top alpha active managers. BA captures the time-varying nature of beta exposures and can be interpreted as a common factor of both systematic risk (SR) and (1 - R2) measures. BA also compares favorably to extant measures of market timing, capturing the explanatory power of such measures of hedge fund performance.

Sentiment and the Effectiveness of Technical Analysis: Evidence from the Hedge Fund Industry

2016 ◽  
Vol 51 (6) ◽  
pp. 1991-2013 ◽  
Author(s):  
David M. Smith ◽  
Na Wang ◽  
Ying Wang ◽  
Edward J. Zychowicz
Keyword(s):  
Hedge Funds ◽  
Lower Risk ◽  
Market Timing ◽  
Hedge Fund ◽  
Technical Analysis ◽  
Fund Managers ◽  
Short Sale ◽  
Timing Ability ◽  
Fund Industry

This article presents a unique test of the effectiveness of technical analysis in different sentiment environments by focusing on its usage by perhaps the most sophisticated and astute investors, namely, hedge fund managers. We document that during high-sentiment periods, hedge funds using technical analysis exhibit higher performance, lower risk, and superior market-timing ability than nonusers. The advantages of using technical analysis disappear or even reverse in low-sentiment periods. Our findings are consistent with the view that technical analysis is relatively more useful in high-sentiment periods with larger mispricing, which cannot be fully exploited by arbitrage activities because of short-sale impediments.

Impact of FII’s and FDI’s on Indian Stock Market

2016 ◽  
Vol 1 (1) ◽  
Author(s):  
Dr. Kamlesh Kumar Shukla
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Global Economy ◽  
Short Term ◽  
Earnings Growth ◽  
The Past ◽  
Bull Market ◽  
Indian Stock Market

FIIs are companies registered outside India. In the past four years there has been more than $41 trillion worth of FII funds invested in India. This has been one of the major reasons on the bull market witnessing unprecedented growth with the BSE Sensex rising 221% in absolute terms in this span. The present downfall of the market too is influenced as these FIIs are taking out some of their invested money. Though there is a lot of value in this market and fundamentally there is a lot of upside in it. For long-term value investors, there’s little because for worry but short term traders are adversely getting affected by the role of FIIs are playing at the present. Investors should not panic and should remain invested in sectors where underlying earnings growth has little to do with financial markets or global economy.

Introduction: Kinship Bereavement in Later Life

1997 ◽  
Vol 35 (1) ◽  
pp. 1-7 ◽  
Author(s):  
Brian De Vries
Keyword(s):  
Adult Child ◽  
Later Life ◽  
Short Term ◽  
Traumatic Grief ◽  
Death Of A Parent ◽  
De Vries ◽  
Longitudinal Effects ◽  
Analysis Of Variation

This article introduces a volume devoted to the examination of later-life bereavement: an analysis of variation in cause, course, and consequence. Six articles address and represent this variation and comprise this volume: 1) Prigerson et al. present case histories of the traumatic grief of spouses; 2) Hays et al. highlight the bereavement experiences of siblings in contrast to those spouses and friends; 3) Moss et al. address the role of gender in middle-aged children's responses to parent death; 4) Bower focuses on the language adopted by these adult children in accepting the death of a parent; 5) de Vries et al. explore the long-term, longitudinal effects on the psychological and somatic functioning of parents following the death of an adult child; and 6) Fry presents the short-term and longitudinal reactions of grandparents to the death of a grandchild. A concluding article is offered by de Vries stressing both the unique and common features of these varied bereavement experiences touching on some of the empirical issues and suggesting potential implications and applications.

scholarly journals Shades between Black and Green Investment: Balance or Imbalance?

2021 ◽  
Vol 13 (9) ◽  
pp. 5024
Author(s):  
 Vítor Manuel de Sousa Gabriel ◽  
María Mar Miralles-Quirós ◽  
José Luis Miralles-Quirós
Keyword(s):  
Risk Factor ◽  
Oil Prices ◽  
Oil Price ◽  
Short Term ◽  
Environmental Indices ◽  
Long Run ◽  
Green Investment ◽  
Bounds Test

This paper analyses the links established between environmental indices and the oil price adopting a double perspective, long-term and short-term relationships. For that purpose, we employ the Bounds Test and bivariate conditional heteroscedasticity models. In the long run, the pattern of behaviour of environmental indices clearly differed from that of the oil prices, and it was not possible to identify cointegrating vectors. In the short-term, it was possible to conclude that, in contemporaneous terms, the variables studied tended to follow similar paths. When the lag of the oil price variable was considered, the impacts produced on the stock market sectors were partially of a negative nature, which allows us to suppose that this variable plays the role of a risk factor for environmental investment.

scholarly journals The key role of contact time in elucidating the mechanisms of enhanced decontamination by Fe0/MnO2/sand systems

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Viet Cao ◽  
Ghinwa Alyoussef ◽  
Nadège Gatcha-Bandjun ◽  
Willis Gwenzi ◽  
Chicgoua Noubactep
Keyword(s):  
Contact Time ◽  
Diffusive Transport ◽  
Iron Hydroxides ◽  
Iron Corrosion ◽  
Short Term ◽  
Batch Studies ◽  
Water Decontamination ◽  
Co Precipitation

AbstractMetallic iron (Fe0) has shown outstanding performances for water decontamination and its efficiency has been improved by the presence of sand (Fe0/sand) and manganese oxide (Fe0/MnOx). In this study, a ternary Fe0/MnOx/sand system is characterized for its discoloration efficiency of methylene blue (MB) in quiescent batch studies for 7, 18, 25 and 47 days. The objective was to understand the fundamental mechanisms of water treatment in Fe0/H2O systems using MB as an operational tracer of reactivity. The premise was that, in the short term, both MnO2 and sand delay MB discoloration by avoiding the availability of free iron corrosion products (FeCPs). Results clearly demonstrate no monotonous increase in MB discoloration with increasing contact time. As a rule, the extent of MB discoloration is influenced by the diffusive transport of MB from the solution to the aggregates at the bottom of the vessels (test-tubes). The presence of MnOx and sand enabled the long-term generation of iron hydroxides for MB discoloration by adsorption and co-precipitation. Results clearly reveal the complexity of the Fe0/MnOx/sand system, while establishing that both MnOx and sand improve the efficiency of Fe0/H2O systems in the long-term. This study establishes the mechanisms of the promotion of water decontamination by amending Fe0-based systems with reactive MnOx.

scholarly journals Reform in the international food aid regime: the role of consensual knowledge

1992 ◽  
Vol 46 (1) ◽  
pp. 225-264 ◽  
Author(s):  
Raymond F. Hopkins
Keyword(s):  
Economic Development ◽  
International Organizations ◽  
Epistemic Community ◽  
Food Aid ◽  
Local Production ◽  
Short Term ◽  
The 1950S ◽  
Food Imports

The principles and norms adopted by the regime governing food aid in the 1950s have changed substantially during the subsequent three decades. Explaining the changes necessarily includes analyzing the efforts of an international epistemic community consisting of economic development specialists, agricultural economists, and administrators of food aid. According to the initial regime principles, food aid should be provided from donors' own surplus stocks, should supplement the usual commercial food imports in recipient countries, should be given under short-term commitments sensitive to the political and economic goals of donors, and should directly feed hungry people. As a result of following these principles, the epistemic community and other critics argued, food aid often had the adverse effects of reducing local production of food in recipient countries and exacerbating rather than alleviating hunger. The epistemic community (1) developed and proposed ideas for more efficiently supplying food aid and avoiding “disincentive” effects and (2) pushed for reforms to make food aid serve as the basis for the recipients' economic development and to target it at addressing long-term food security problems. The ideas of the international epistemic community have increasingly received support from international organizations and the governments of donor and recipient nations. Most recently, they have led to revisions of the U.S. food aid program passed by Congress in October 1990 and signed into law two months later. As the analysis of food aid reform demonstrates, changes in the international regime have been incremental, rather than radical. Moreover, the locus for the change has shifted from an American-centered one in the 1950s to a more international one in recent decades.

Economic valuation and the commodification of ecosystem services

2011 ◽  
Vol 35 (5) ◽  
pp. 613-628 ◽  
Author(s):  
Erik Gómez-Baggethun ◽  
Manuel Ruiz-Pérez
Keyword(s):  
Ecosystem Services ◽  
Environmental Policy ◽  
Biodiversity Conservation ◽  
Economic Valuation ◽  
Short Term ◽  
Valuation Of Ecosystem Services ◽  
Equity Of Access ◽  
The Way

In the last decade a growing number of environmental scientists have advocated economic valuation of ecosystem services as a pragmatic short-term strategy to communicate the value of biodiversity in a language that reflects dominant political and economic views. This paper revisits the controversy on economic valuation of ecosystem services in the light of two aspects that are often neglected in ongoing debates. First, the role of the particular institutional setup in which environmental policy and governance is currently embedded in shaping valuation outcomes. Second, the broader economic and sociopolitical processes that have governed the expansion of pricing into previously non-marketed areas of the environment. Our analysis suggests that within the institutional setup and broader sociopolitical processes that have become prominent since the late 1980s economic valuation is likely to pave the way for the commodification of ecosystem services with potentially counterproductive effects in the long term for biodiversity conservation and equity of access to ecosystem services benefits.

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