Wed, Aug 24, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Study reveals hedge funds are not such bad guys on the herding front

Tuesday, July 03, 2012

Beverly Chandler, Opalesque London: A new study, entitled Hedge Fund Herding and Crowded Trades: The Apologists’ Evidence from American academics Blerina Reca, from the Department of Finance at the University of Toledo, Richard Sias, Professor and Tyler Family Chair in Finance at the University of Arizona and H. J. Turtle from the Department of Finance at West Virginia University compares hedge funds’ propensity to engage in herding and crowded trades with other institutional investors.

Sias comments on the study, that hedge funds are widely viewed as the bad guys, trading excessively, herding to the latest fad, and crowding into the same trades, behaviour which leads to excess volatility and driving prices from fundamental value.

Sias writes: "This widely-accepted view of hedge funds, however, is driven by anecdotes rather than evidence. In the first study of its kind, we compare hedge funds’ propensity to engage in herding and crowded trades to other institutional investors. Not surprisingly, we find that hedge funds’ role in the market dramatically increases over time and hedge funds have much higher turnover than other professional investors". However, the research revealed other traits, inconsistent with hedge funds’ public perceptions, such as:

  • Other (non-hedge-fund) professional investors herd into and out of the same stocks to a much greater degree than do hedg......................

    To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Algorithms platform aims to target typical challenges found in quantitative hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva: Last month, Quantopian received investments from Point72 Ventures, the new venture capital arm of Steven Cohen’s Point72 Asset Management.

  2. LatAm hedge funds surge in 1H to +24.4%, emerging markets assets rise[more]

    Komfie Manalo, Opalesque Asia: Hedge funds investing in Latin America posted strong gains through mid-2016, reversing declines in four of the past five years, including the last three years, to lead all areas of hedge fund performance through the first half of 2016, according to the latest HFR Em

  3. Opalesque Roundtable: Low and high fee investments often better than mid fee hedge funds[more]

    Komfie Manalo, Opalesque Asia: Hedge funds that charge the low and high fees stuff often provide better returns than "those sort of mid-fee investments", said Keith Haydon, chief investment officer of Man FRM. (Alternative) investment managers who charge high fees would often provide the most int

  4. Hedge fund investors pull $5.7 billion in July[more]

    From Bloomberg.com: Hedge funds suffered a third consecutive month of outflows in July as investors withdrew $5.7 billion, according to industry tracker Eurekahedge. Redemptions totaled $20.7 billion in the three months through July, with money managers betting on equities suffering $18.4 bill

  5. …And Finally - Police contact Catholic Church after baffling ‘poltergeist’ report[more]

    From Telegraph.co.uk: Police officers in Scotland have called in representatives from the Catholic Church after investigating reports of “disturbing incidents” of a "poltergeist" at a family home. A mother and her teenage son were said to be “extremely distressed” after experiencing what the D