Large Hedge Fund Survivor Bias

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Why Size Isn’t Everything Hedge fund survivor bias is especially insidious for the largest firms. Large hedge fund survivor bias overstates expected performance of the biggest firms by nearly half and their risk adjusted return from security selection (stock picking) by 80%. It is impossible to predict the largest funds of the future, but one doesn’t have to – robust skill analytics identify funds that will do even better in the future than tomorrow’s largest. Past Performance of Today’s Largest Hedge Funds We follow the approach of our earlier piece on hedge fund survivor (survivorship) bias, which analyzed the largest firms’…

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