Perfectly aligned interests?
Their performance has been disappointing lately and they are too expensive but, at least, their managers’ interests are perfectly aligned with ours. This is a widely held view on hedge funds. But in fact, two of the three statements are false. The only one that is correct is that they are too expensive. I will […]
Manager selection and college football
Some years ago, Goyal and Wahal published a somewhat depressing article that suggested that pension funds and their consultants added no value, on average, in their manager hiring and firing decisions. In particular, replacing poorly performing managers with new ones actually led to worse performance than if the fund had stuck with the old managers […]
Ethical…?
The two big public pension plans in Geneva are in dire straits. The local legislature is considering a bill this week that would merge them and would also provide a capital injection of almost a billion Swiss francs. The funds have pursued what is euphemistically called a mixed financing strategy. Their assets cover less than […]
Why buy Carlyle?
The Carlyle Group is about to go public. The founders of the second-largest private equity group wish to create a vehicle that will allow them to cash out gradually. It is perfectly understandable that they would want to sell some of their holdings. What is much less obvious is why anybody would want to buy. […]
Lies, damn lies and FTfm statistics
This week’s FTfm (the FT’s financial market supplement) ran an article headlined Hedge fund gains are other funds’ losses (access reserved to subscribers). It finds that hedge fund managers outperformed over the past thirteen years and that this outperformance was “financed” by a corresponding underperformance of traditional asset managers. This would be very good news […]
Showing ever better performance
Even though we all know that past performance is a very imperfect guide to future performance, it is still a major factor for many investors – if not the major factor – in the manager selection process. It is therefore natural that managers seek to present their performance numbers in the most favorable light possible. […]
Is Switzerland still a “special case”?
Apologies to my non-German speaking readers. The document to which this post refers is in German but its main points are summarized in the post. This first “oldie” post is about a speech that I gave over twenty years ago (in 1989) in Basel to an audience of about 100 Swiss bankers. At the time, […]
Advertising structured products
The graph on the left is, in a way, the poster child for all that is wrong with the structured products industry. Julius Baer are using it in their promotional materials to sell Diskontzertifikate or discount certificates. These products are extremely popular in Germany and Switzerland. Their name suggests that they represent a bargain: the […]
Reader beware
By Rolf on 18 April 2013
Lessons from the Reinhart-Rogoff saga The controversy about the mistakes in the Reinhart and Rogoff 2010 paper has left their reputation somewhat in tatters and has provided ample scope for expressions of Schadenfreude among economists. But there are actually also some interesting lessons in this sad development for those of us who are interested in […]
Posted in Comments/ramblings | Tagged Empirical research