Two pressing challenges face hedge fund investors. The first is inappropriate choice of style and the second is accidental style convergence. The first involves adopting the wrong investment methods at the wrong points of the investment cycle. The second is an ever-present danger akin to "style leakage", where managers gravitate towards strong trends regardless of their own underlying styles. This year has seen more and more hedge fund returns correlate too closely with the Nasdaq Index.
The week on Risk.net, December 9–15 2017Receive this by email