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Young Hedge Funds THAT Much Better
When you think about it, it makes sense: young hedge funds will perform better because they’re hungry and still have the drive to do well, compared with their complacent, more experienced counterparts. But how much better is a shocker.
When you think about it, it makes sense: young hedge funds will perform better because theyre hungry and still have the drive to do well, compared with their complacent, more experienced counterparts. But how much better is a shocker. According to Hedge Fund Research, annualized returns over a 10-year period to December 2004 of HFs under 2 years old were 16.91% 1,000 basis points above the overall 6.38% for all funds. Even over five-years, based on the HFR figures, the young ones blew away the more established hedge funds: 11.13% vs. 5.17%. That will not be lost on investors, especially in these times when returns notwithstanding the healthy quarter hedgies just enjoyed have not been what they used to be. The gap is significant even after taking account of the failure rate of start-ups, namely survivor bias, Stephen Oxley of Pacific Alternative Asset Management told a recent conference. It should be noted that last month, a study concluded the same thing about private equity. The lesson elders need to learn, it appears, is how to keep the fire under them burning.