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Journal Article

Limitation on Trader Fund Losses under the CARES Act of 2020

We explain how hedge fund investors might be affected by a limitation on excess business losses codified in recent tax legislation. In order to allocate business losses a hedge fund now must be a trader fund. After explaining the relationship between hedge fund losses and business losses, we illustrate with simple examples how the new provisions may affect hedge fund investors.

Chief Investment Quarterly

You Can’t Hedge, but You Can Diversify

Investors may benefit from adding diversifiers to their portfolios, but diversifiers aren’t hedges. Hedges serve a different purpose…unless they’re from Texas.

Perspective

The Hedgie in Winter

Cliff explains once again why hedge fund returns shouldn’t be compared to 100% long equities, how to do a more proper comparison, and then shares results.

Perspective

Hedge Funds Search for Their Real Killers

After decades of being one of the very early hedge fund critics, Cliff Asness has recently (tepidly) defended hedge funds from overwrought attacks that wrongly compare them to a beta of 1.0 in a bull market.

Perspective

Hedging on Hedge Funds (postscript on correlations, beta, and “alpha”)

After Cliff's last piece on hedge funds, there were a lot of questions about “beta” versus “correlation” with the market and, more generally, about “alpha.” He demonstrates why correlation and beta are not the same.

Perspective

Response to Miles Johnson

Cliff disagrees with the ways certain members of the press have established their annual lists of the top hedge fund earners. In his view, the math was simply bad and intentionally misleading.

Perspective

Hedging on Hedge Funds

Cliff Asness discusses how the current criticism toward hedge fund performance is often off-point, though reiterates his earlier argument that most hedge funds are too correlated with equity markets and too expensive.

Perspective

Efficient Inefficiency: The Oxymoron That Explains the Investing World

Lasse Pedersen's new book, Efficiently Inefficient, is almost too good at laying out how successful professional asset managers think and act.

Perspective

An Annual Article About Nothing

Cliff examines a popular front-page New York Times article covering the top hedge fund earners.

White Paper

Building a Better Equity Market Neutral Strategy

Equity Market Neutral (EMN) is a well-established strategy designed to seek positive performance without exposing investors to the risk of the overall equity market. We explain how systematic EMN works to potentially improve diversification and returns.