Dead Hedge Funds Not Really Dead

Interesting post over at the AllAboutAlpha site that is worth the read. The post discusses how even if a hedge fund has stop reporting returns, this does not imply that the fund is dead and closing up shop after blowing-up in the recent market downturn. As it turns out, only about a fifth of the funds (according to the study) stop reporting because they are liquidating. Others simply have stopped taking on new investors, or have other reasons for not reporting returns. Of interest in the article is how the researchers studied fund-of-funds to estimate (guess) what the returns are of those funds that have stopped reporting (given that their performance is still showing up in the fund-of-funds that do report). Not surprising, while the "dead" funds that no longer report returns did perform worse than those that did report, the level of losses were close to -3%, and not in the category of "blown-up." While many funds may still go under (in part due to it now taking too long to reach high water marks after significant losses), the reports of the death of hedge funds may be greatly exaggerated.