Hedge Funds Do Half as Well as You Think

It's the dog days of summer, when college professors are supposed to be doing nothing but mimeographing their syllabus and mending the elbow patches on their blazers (or whatever it is that they do in the summer.)

But that's not stopping some academics from throwing shade, as the kids say, in the general direction of the hedge fund industry.

Their study shows that due to inherent biases in the way hedge-fund databases compile results, the industry's returns have been about half as strong as they appear. The average annualized return for the industry since 1996 goes from 12.6 percent to 6.3 percent when the biases are removed from the data, according to the paper