FX hedge funds have experienced very weak returns and high fund failure rates, as currency predictability decays. The managers of these funds face strong incentives to concentrate on new asset classes, creating a natural experiment to test whether observed manager skill is FX specific, or...

We show that earning non-hedge fund income is associated with lower future hedge fund performance. Specifically, generating non-hedge fund income reflects weakened alignment between the incentives of hedge fund management firm owners and the interests of investors. Using a hand-collected...

We show that fund-specific return skewness is associated with managerial skill and future hedge fund performance. Specifically, skewness in fund returns reflects managerial skill in avoiding large drawdowns. Using a new measure of investment skill that accounts for this managerial ability, we...