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7 Hedge fund performance.(Portfolio Performance Evaluation)

Hedge funds have been in business for over 60 years. However, the recent growth in hedge fund assets and the significant attention devoted to hedge funds in the popular press has increased the interest in hedge fund performance. Like mutual funds, hedge funds are open-ended investment companies that pool dollars from a group of investors. Unlike mutual funds, hedge funds are exempt from the Investment Company Act. The growth in the industry and the differences from mutual funds have created a challenging new avenue for performance evaluation.

From a research standpoint, hedge fund performance poses several interesting features. For one, the compensation of a typical hedge ...

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