A number of institutional investors now allocate a sizeable portion of their portfolios to hedge funds. This interest in hedge funds can be explained by the poor performance exhibited by traditional asset management.
For some years now, numerous studies have shown that the vast majority of active asset managers do not outperform passive investment.
Some authors find that the outperformance generated by active management just covers the costs generated by the strategy (Grossman and Stiglitz 1980;
The week on Risk.net, December 9–15 2017Receive this by email