Gauging performance

Hedge fund performance measures must incorporate risk to be useful for investors. But not all performance measures are created equal, argues Barry Schachter


If it is accepted that the expected return is the reward for taking risk, then it immediately follows that risk measurement and performance measurement are inseparable concepts. However, they are often not treated that way, and therein lies a host of problems.

While the financial media is fond of ranking hedge funds by year-to-date returns, most would agree this is not useful as it does not consider risk. For ranking by returns alone to be useful, investors must be risk neutral. A risk-neutral

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options


Want to know what’s included in our free membership? Click here

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here