Hedge funds for retail investors? - An examination of hedged mutual funds
Recently there has been a rapid growth in the assets managed by hedged mutual funds mutual fundsmimicking hedge funds strategies. In this paper, we examine the performance of these funds relative tohedge funds and traditional mutual funds. We find that despite their use of similar trading strategies,hedged mutual funds underperform hedge funds. We attribute this evidence to lighter regulation andbetter incentives faced by hedge funds. In contrast, hedged mutual funds outperform traditional mutualfunds. Most interesting, this superior performance is largely driven by managers with experience inimplementing hedge fund strategies. Our findings have important implication for investors seeking hedgefund-like payoffs at a lower cost and within the comfort of a regulated environment.
Corporate finance and investment policy. Other aspects ; Management of financial services: stock exchange and bank management science (including saving banks) ; Individual Working Papers, Preprints ; No country specification