Abstract

http://ssrn.com/abstract=1135664
 
 

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Hedge Fund Legal Structure and its Impact on Performance


Raj Gupta


University of Massachusetts at Amherst - Department of Finance & Operations Management

Edward Szado


University of Massachusetts at Amherst - Isenberg School of Management

May 20, 2008


Abstract:     
While there is a plethora of research on investment strategies, asset allocation and risk management, one area where academic research is scarce is the legal structure that a fund employs and the resulting differences in performance and risk. Hedge funds may be set up using a variety of legal structures. Among the more common ones are Open Ended Investment Company, Limited Liability Company, Partnership (3C1), Partnership (3C7) and Corporation. This article bridges the gap by examining performance from the perspective of the legal structure of the hedge fund. Using the Morningstar database, legal structures are examined at the strategy level. A probit model is formulated to examine whether or not performance and level of assets are influenced by the legal structure. The results show that while there are no uniformly significant differences between the performances and assets of funds using various structures certain patterns hold as to the level of assets and legal structures.

Number of Pages in PDF File: 21

Keywords: Hedge, fund, structure, 3c1, 3c7, llp, llc, legal, corporate, governance

JEL Classification: f30, g23, g32, g34, k20, l22

working papers series


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Date posted: May 21, 2008  

Suggested Citation

Gupta, Raj and Szado, Edward, Hedge Fund Legal Structure and its Impact on Performance (May 20, 2008). Available at SSRN: http://ssrn.com/abstract=1135664 or http://dx.doi.org/10.2139/ssrn.1135664

Contact Information

Raj Gupta
University of Massachusetts at Amherst - Department of Finance & Operations Management ( email )
Amherst, MA 01003
United States
413-230-3571 (Phone)
Edward Szado (Contact Author)
University of Massachusetts at Amherst - Isenberg School of Management ( email )
Amherst, MA 01003-4910
United States
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