Hedge Funds: A Dynamic Industry in Transition

135 Pages Posted: 29 Jul 2015  

Mila Getmansky

University of Massachusetts at Amherst - Eugene M. Isenberg School of Management - Department of Finance

Peter A. Lee

AlphaSimplex Group, LLC

Andrew W. Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER); Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Multiple version iconThere are 3 versions of this paper

Date Written: July 28, 2015

Abstract

The hedge-fund industry has grown rapidly over the past two decades, offering investors unique investment opportunities that often reflect more complex risk exposures than those of traditional investments. In this article we present a selective review of the recent academic literature on hedge funds as well as updated empirical results for this industry. Our review is written from several distinct perspectives: the investor's, the portfolio manager's, the regulator's, and the academic's. Each of these perspectives offers a different set of insights into the financial system, and the combination provides surprisingly rich implications for the Efficient Markets Hypothesis, investment management, systemic risk, financial regulation, and other aspects of financial theory and practice.

Keywords: Hedge Funds, Alternative Investments, Investment Management, Long/Short, Illiquidity, Financial Crisis

JEL Classification: G20, G23, G24, G12

Suggested Citation

Getmansky, Mila and Lee, Peter A. and Lo, Andrew W., Hedge Funds: A Dynamic Industry in Transition (July 28, 2015). Available at SSRN: https://ssrn.com/abstract=2637007 or http://dx.doi.org/10.2139/ssrn.2637007

Mila Getmansky Sherman

University of Massachusetts at Amherst - Eugene M. Isenberg School of Management - Department of Finance ( email )

Amherst, MA 01003-4910
United States

Peter A. Lee

AlphaSimplex Group, LLC ( email )

One Cambridge Center
Cambridge, MA 02142
United States

Andrew W. Lo (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-618
Cambridge, MA 02142
United States
617-253-0920 (Phone)
781 891-9783 (Fax)

HOME PAGE: http://web.mit.edu/alo/www

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Stata Center
Cambridge, MA 02142
United States

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