Hedge Fund Annual Returns Are Totally Skewed

A new study finds that the industry figures that report on hedge fund’s annual returns are skewed.

Funds in their last 12 months of existence are left out of the data, which is ridiculous. Somehow, it doesn’t change much. The gap in returns between the failing funds and others only averaged 0.54% per month, or about 6% per year (from 1994 through the first quarter of 2009).

The white bars in this chart from Bloomberg show the difference between the failing funds that aren’t reporting and others. The blue line depicts a similar return gap between failed funds as of March 2009 and survivors.

Read more on Bloomberg.

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