HEDGE FUND MANAGERIAL INCENTIVES AND PERFORMANCE

Abstract

The growth of the hedge fund industry over the decades has brought an interesting form of performance contract between the portfolio managers and their investors. The contractual relation has given an impact to the performance of the hedge fund industry, which benefited both fund managers and investors. Furthermore, it has created more investors and fund managers to participate in this high risk and high return investment. Currently, many issues on fee structures and performance- based incentives have been discussed. Do these issues affect the performance of the hedge fund in the market? This paper will investigate the issues in Australian market. It will empirically analyze the hedge fund performance in relation to the market performance and whether managerial incentives and discretions associated with better fund performance

Keywords

• Managerial Performance, Fund Performance, Market Performance

References

1. Ackermann, C., McEnally, R., & Ravenscraft, D. (1999). The Performance of Hedge Funds: Risk, Return, and Incentives. The Journal of Finance, 54(3), 833-874.
2. Agarwal, V., Daniel, N. D., & Naik, N. Y. (2009). Role of Managerial Incentives and Discretion in Hedge Fund Performance. The Journal of Finance, 64(5), 2221-2256.
3. Amin, G. S., & Kat, H. M. (2001). Hedge fund performance 1990-2000: do the 'money machine' really add value? The Journal of Financial and Quantitative Analysis, 38(2), 251-274.
4. Amin, G. S., & Kat, H. M. (2003). Hedge Fund Performance 1990-2000: Do the "Money Machines" Really Add Value? The Journal of Financial and Quantitative Analysis, 38(2), 251-274.
5. Brown, S. J., Goetzmann, W. N., & Ibbotson, R. G. (1999). Offshore hedge funds: Survival and performance. Journal of Business (72), 91-117.
6. Carl Ackermann, R. M. D. R. (1999). The Performance of Hedge Funds: Risk, Return, and Incentives. The Journal of Finance, 54(3), 833-874.
7. Das, N. (2003). Essays on hedge funds. Unpublished Ph.D., Lehigh University, United States -- Pennsylvania.
8. Edwards, F. R., & Caglayan, M. O. (2001). Hedge fund performance and manager skill. Journal of Futures Markets 21, 1003-1028.

9. Fama, E. F., & French, K. R. (1993). Common risk factors in the retrns on stocks and bonds. Journal of Financial Economics, 33, 3-56.
10. Fama, E. F., & French, K. R. (1998). Value versus growth: the internatinal evidence. Journal of Finance, 1975-19999.
11. Fama, E. F., & French, K. R. (2003). The Capital Asset Pricing Model: Theory and Evidence: SSRN.
12. Fung, W., & Hsieh, D. A. (1997). Empirical characteristics of dynamic trading startegy: the case of hedge fund. Review of Financial Studies, 10, 275-302.
13. Fung, W., & Hsieh, D. A. (2001). Asset-Based Hedge-Fund Styles and Portfolio Diversification. SSRN eLibrary.
14. Goetzmann, W. N., Ingersoll, J. E., Jr., & Ross, S. A. (2003). High-Water Marks and Hedge Fund Management Contracts. The Journal of Finance, 58(4), 1685-1717.
15. Gompers, P., & Josh, L. (1999). An analysis of compensation in the US venture capital partnership. Journal of Financial Economics, 51, 3-44.
16. Liang, B. (1998). On the Performance of Hedge Funds: SSRN. Eureka Hedge, 2009
17. Hedge fund Intelligence Press Release, 27 March 2006.