Sydney Morning Herald- For the past decade, its explosive growth has been based on a simple claim: that skilled money managers, motivated by high performance fees, could outperform the market when it was going up – and sidestep the trouble when it was going down.<\/p>\n
And yet the credit crunch has shown that to be a myth. Although a few hedge-fund managers have done brilliantly, far more have come unstuck.<\/p>\n
Now it looks as if the industry might be based on a more systematic falsehood. Two recent academic studies suggest that hedge funds have been routinely dishonest, or at least economical with the truth.<\/p>\n
If that’s right, then it is worrying for alternative-asset managers. As the idea gets out that hedge funds can’t deliver the kind of guaranteed returns they promised, a lot of money is heading for the door marked exit.<\/p>\n