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March 29, 2006
Hedge Fund Performances
It has been indicated by recent studies in the field of hedge funds, that hedge funds as a class of investment vehicles offer far greater return than their cousins ‘mutual funds’. However, this offering of a greater return comes bundled up with yet greater risk, than investment benchmarks such as Standard and Poor’s S&P; 500 stock index. Well, it is not really surprising to note that certain classes of hedge funds have at times outperformed their benchmark measures on a risk-adjusted basis, while other classes have at times underperformed. The fact to note about hedge fund performance in general is that there has not been a high correlation, historically, between overall market performance and hedge fund returns. This unique factor has resulted in hedge funds finding place in the portfolios of wealthy individuals and institutional investors who seek a broad diversification of their investments. This flexibility and robustness could be one of the reasons behind the spectacular rise of hedge funds world over.--
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