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Alternative Market Briefing

Study of Canadian hedge funds and mutual funds finds hedge funds hedge

Tuesday, September 04, 2012

Beverly Chandler, Opalesque London: Using hedge fund data drawn from Hedge Fund Research, and mutual fund data from Morningstar, Indian academic Amitesh Kapoor from Lovely Professional University has produced a paper entitled 'Performance Comparison of Canadian hedge funds and mutual funds.’

Kapoor used performance measurement tools and other risk adjusted measures to analyse, evaluate, and compare the performance of Canadian hedge funds and Canadian mutual funds. His key findings were that hedge fund alpha was much higher than that found in comparable mutual funds; that both hedge funds and mutual funds have outperformed benchmarks; that when there is a period of recession or when markets are down or stable, hedge funds outperform mutual funds and that in a bull market Canadian hedge funds and mutual funds generate almost the same returns.

In his conclusion, Kapoor reports that hedge funds provide higher returns and alphas than traditional mutual funds, similar to the findings of Eling and Faust 2010 for European data. He finds that in general hedge funds and mutual funds outperform benchmarks but that hedge funds achieve tha......................

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