The objective of this paper is to set a framework for a reasoned discussion of hedge funds. I shall first describe what they are and what they do. The compensation arrangements for hedge funds would appear to encourage risk-taking behavior that generates extraordinary returns. Interestingly enough, hedge fund returns are not extraordinary. They are not the gunslinging risk-takers of public perception. In fact, an analysis of the events of 1997 suggest, if anything, that they were somewhat gun-shy. We shall examine why this is the case. We shall conclude by examining their widely publicized role in the Asian currency crisis. © 2001 Elsevier Science B.V.
|Journal||Pacific Basin Finance Journal|
|Publication status||Published - Aug 2001|