Lessons from the Sub-Prime Crisis

• Main Author: TEO, Melvyn
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2007
• Subjects: Financial Crisis; Hedge Funds; leveraged funds; credit market liquidity; redemptions; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/bnp_research/1; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1000&context=bnp_research
• Institution: Singapore Management University

We show that there is significant variation in performance across hedge funds during the subprime crisis. Hedge funds that (i) invested in Asia, (ii) had equity exposure, (iii) adopted directional strategies, or (iv) allowed for frequent redemptions, underperformed other funds. Moreover, leveraged f...