Hedge funds not doing enough to fix mispricings, study finds

Passive investing has blunted market efficiency, but hedge funds are failing to capitalise


Hedge fund managers like to say they keep markets honest by shorting overvalued assets and buying those that look cheap. In reality, though, many seem to have adopted an “if you can’t beat them, join them” strategy that may be contributing to greater volatility in financial markets.

A recent study from academics at UCLA and the University of Minnesota suggests hedge funds are failing to play the stabilising role in markets they say they do, and may even be adding to the effects of passive

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