Backtesting ain't crashtesting

Hedge funds live or die by the numbers, but what if there are none? Solomon Teague asks what the industry thinks about backtesting, and track records

For many experienced investors, backtested data are not worth the paper they are printed on.

"I have yet to see poor backtested data, especially in fund marketing documentation," says Phil Irvine, head of advisory at Liability Solutions.

There is a perception that managers will only release data that makes their fund look good. With very little transparency in how stocks may be selected or rejected, any positions that would have led a fund to post a loss on a given month in history can easily be

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