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Larger Hedge Funds

Larger Hedge Funds

New Study: Larger Hedge Funds More Vulnerable

A new study claims that larger hedge funds may not be better, even though investors often trust larger hedge funds more than smaller funds. The study, by fund manager Jason Orchard and Fordham University accounting professor Haim Mozes, found that larger hedge funds are less nimble than smaller funds. This, the paper argues, sometimes gives smaller hedge funds the advantage as the returns to investors in larger funds lag.
"The opportunity costs of investing in large funds may be higher and the safety benefit of investing in large funds may be lower than investors currently expect," said Orchard, a principal at New York-based hedge fund Spring Mountain Capital.
Big hedge funds are more likely than smaller hedge funds to either go out of business or to restrict investors from getting all of their money back when they want, the authors wrote.

The findings stand in stark contrast to conventional wisdom that large hedge funds are better able to withstand market turmoil by hiring top analysts and having enough cash to meet investor redemptions. Source

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