Diversification Strategies and the Performance of Funds of Hedge Funds

Posted: 22 May 2019

See all articles by Na Dai

Na Dai

SUNY at Albany - School of Business

Hany A. Shawky

State University of New York at Albany - School of Business and Center for Institutional Investment Management

Date Written: December 3, 2010

Abstract

Funds of hedge funds are diversified investment vehicles that provide investors with diversification either across managers within a specific hedge fund strategy or across a wide range of hedge fund strategies. In this paper, we contrast the performance of funds of hedge funds that diversify across managers (but stay within a single hedge fund strategy) versus those that diversify across managers and hedge fund strategies. Our empirical results provide strong evidence in favor of the later. Funds of hedge funds that diversify across both managers and strategies outperform those funds that diversify across managers but stay within a single hedge fund strategy.

Keywords: Diversification, fund of hedge funds, specialization, performance

JEL Classification: G10, G11, G12

Suggested Citation

Dai, Na and Shawky, Hany A., Diversification Strategies and the Performance of Funds of Hedge Funds (December 3, 2010). https://doi.org/10.3905/jai.2012.15.2.075 . Available at SSRN: https://ssrn.com/abstract=1719749 or http://dx.doi.org/10.2139/ssrn.1719749

Na Dai (Contact Author)

SUNY at Albany - School of Business ( email )

1400 Washington Ave.
Albany, NY 12222
United States

Hany A. Shawky

State University of New York at Albany - School of Business and Center for Institutional Investment Management ( email )

School of Business
1400 Washington Ave.
Albany, NY 12222
United States
518-442-4921 (Phone)
518-442-3944 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,890
PlumX Metrics