FTFM Hedge funds have made money this year. This is a gratifying change compared with last year, but there remains a nasty possibility that it will do them little or no good.
Measuring the performance of the hedge fund industry as a whole remains a maddeningly inexact science, which if anything may be getting harder. Hedge fund indices are proliferating, while the number of funds – thanks to last year’s disaster – is dwindling. In the process, “survivorship bias”, the phenomenon that overall results will be skewed positively by the fact that funds that failed to survive are no longer part of the data, becomes more of a problem.
