| LONDON, April 24
LONDON, April 24 Hedge fund managers pocketed
28.1 percent of profits generated by their funds over the past
18 years, new research from London's Imperial College found.
The research, commissioned by KPMG and hedge fund industry
body the Alternative Investment Management Association, found
investors' share of annual profits delivered by hedge funds from
1994-2011 was 71.9 percent.
It also found funds delivered an average annual return of
9.07 percent from 1994-2011, compared with 7.27 percent from
global commodities, 7.18 percent from stocks, and 6.25 percent
from global bonds.
"This research ... disproves common public misconceptions
that hedge funds are expensive and do not deliver," said Rob
Mirsky, head of hedge funds at KPMG in Britain.
The study, which assumed average hedge fund fees of 1.75
percent and performance fees of 17.5 percent, followed the
publication in January of 'The Hedge Fund Mirage' by fund
manager Simon Lack.
The book, which prompted a swift rebuttal from the hedge
fund industry, said hedge fund managers themselves had earned 84
percent of returns delivered by their funds from 1998-2010.
The study found a relatively high level of correlation
between hedge funds and global stocks, particularly during
The findings come after a 2011 in which funds lost money as
markets fell on worries over the euro zone debt crisis and a
first quarter of 2012 in which a market rebound has fuelled a
resurgence in fund performance.
Correlations between hedge funds and global stocks were 0.87
during recessions and 0.77 outside recessions. A score of 1
indicates a perfect correlation.
The highest correlation was between equity hedge funds - one
of the most popular strategies - and global stocks during
recessions at 0.91.