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Alternative Market Briefing

Aima and KPMG study finds hedge funds have outperformed traditional markets over the past 17 years

Tuesday, April 24, 2012

Beverly Chandler, Opalesque London: A new study The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy has found that hedge funds significantly outperformed traditional asset classes such as equities, bonds and commodities over the last 17 years. The research, conducted by The Centre for Hedge Fund Research at Imperial College in London was commissioned by KPMG, the international audit, tax and advisory firm, and the Alternative Investment Management Association (AIMA), the global hedge fund association and is described as the most comprehensive of its kind to date.

The report found that, per annum, hedge funds returned 9.07% on average after fees between 1994 and 2011, compared to 7.18% for global stocks, 6.25% for global bonds and 7.27% for global commodities. The study finds that hedge funds achieved these returns with considerably lower risk volatility as measured by Value-at-Risk (VaR) than either stocks or commodities. Their volatility and Value-at-Risk were similar to bonds, an asset class considered the least risky and volatile. The research also demonstrated that hedge funds were significant generators of "alpha", creating an average of 4.19% per year from 1994-2011.

"This research is powerful proof of hedge funds’ ability to generate stronger returns than equities, bonds and commodities and to do so with low......................

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