Harry M. Kat

Harry M. Kat is Associate Professor of Finance at the ISMA Centre Business School at the University of Reading and holds MBA and PhD degrees in economics and econometrics from the Tinbergen School of Business at the University of Amsterdam. Dr Kat is a member of the editorial boards of The Journal of Derivatives and The Journal of Alternative Investments and has (co-)authored articles in well-known finance journals such as The Journal of Financial and Quantitative Analysis, The Journal of Derivatives, and The Journal of Financial Engineering. His new book Structured Equity Derivatives was published in July 2001 by John Wiley & Sons.

Papers Published in World Economics:

Some Facts about Hedge Funds
Author: Harry M. Kat

Hedge funds promise investors the best of both worlds: superior performance and high diversification potential combined into one. This article discusses a number of recent findings that show that the case for hedge funds is less straightforward than often portrayed. A close look at the available hedge fund return data reveal substantial bias which makes interpretation complex. When using traditional performance measures, this will cause investors to overestimate the expected return and underestimate the risk of hedge funds. As a result, they are likely to overinvest in hedge funds.

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