The Impact of Hedge Fund Family Membership on Performance and Market Share

Journal of Financial Transformation, Forthcoming

20 Pages Posted: 19 Oct 2008  

Nicole M. Boyson

Northeastern University - D’Amore-McKim School of Business

Date Written: September 24, 2008

Abstract

We study the impact that hedge fund family membership has on performance and market share. Hedge funds from small fund families outperform those from large families by a statistically significant 4.4% per year on a risk-adjusted basis. We investigate the possible causes for this outperformance, and find that regardless of family size, fund families that focus on their core competencies have "core competency" funds with superior performance, while the family's non-core competency funds underperform. We next examine the determinants of hedge fund family market share. A family's market share is positively related to the number and diversity of funds offered, and is also positively related to past fund performance. Finally, we examine the determinants of fund family market share at the fund style/strategy level. Families that focus on their core competencies attract positive and significant market share to these core-competency funds. Hence, by starting new funds only in their family's core competencies, fund managers can enjoy increased market share while their investors enjoy good performance.

Keywords: hedge funds, fund families, market share

Suggested Citation

Boyson, Nicole M., The Impact of Hedge Fund Family Membership on Performance and Market Share (September 24, 2008). Journal of Financial Transformation, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1286434

Nicole M. Boyson (Contact Author)

Northeastern University - D’Amore-McKim School of Business ( email )

360 Huntington Ave.
Boston, MA 02115
617-373-4775 (Phone)

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