What does this paragraph mean?

However, this simple linear model does not appear to work very well for hedge funds. Fung
and Hsieh (1997) report that while mutual fund returns have high and positive correlation with asset
class returns, hedge fund returns have low and sometimes negative correlation with the same asset
class returns. They attribute this failure to the dynamic use of leverage and changes in asset exposure
by hedge funds. This kind of active portfolio management affects performance measurement in non-
trivial ways. Dybvig and Ross (1985), for instance, show how linear risk models fail to properly
rank fund managers when they change their asset weights through time. Fung and Hsieh (1997)
observe that this attribute also causes problems for a style based interpretation of the asset class loadings. The way in which fund managers change asset weights in response to economic
circumstances can itself be legitimately characterized as part of their asset management style.

http://papers.ssrn.com/sol3/papers.cfm?a... is the source

It means don't use a linear model to predict the performance of a hedge fund.

Tags

　　Global Investment 　　Fund Portfolio 　　Fund Performance 　　Fund Manager 　　Fund Management 　　Forex 　　Foreign Investment 　　Financial Investment 　　Fidelity Investment

Related information

Some one answer this question!!!?

if you would narrow that down some,, Jo would pick the right answer...

...

What's the best way to change from careers in finance?

As you probably already know, entry-level is key when entering a field for the first time. You are at a good start right now, but know that reaching the level of a research analyst or securities m...

Most respectfully, I would like to be confirmed of the genuineness of the added mail.?

It's definitely a fake.. you can't win a lottery you never entered! And no such lottery exists anyway...

...

If I'm planning on being a financial planner, how much commission should I charge for the funds I sell?

This isn't something YOU get to decide-there are laws that tell you how much you can charge in a certain range your example of Janus overseas is a no-load fund. If you are able to sell thi...

AESK.OB what does this mean?

It means the company is going out of business. They couldn't meet the cash requirements to payout their preferred stock and are liquidating their assets and shutting down. The class A common...

Where does international student investment in stock, options, ETF and funds?

check out for a Broker by the name- Man Financials, its a big & reputed firm, try & open an account over there, coz it could provide you a platform to invest in several markets & instru...

What ETF have the lowest total cost?

Virtually all ETFs have low expenses because there is no real "management" other than keeping the holdings in line with the index they track. But you can go to Morningstar.com (and many ...

What type of one trading account do I need?

Obviously it wouldn't be a minors account since you're not a minor. I suspect the 'custodial' account they are referring to is simply an account where your investments are mana...