The hedge fund business has grown dramatically during the last 20 years, with greater than eight thousand funds now controlling shut to 2 trillion dollars. Initially meant for the rich, these personal investments have now attracted a wider following that features pension funds and retail buyers. As a result of hedge funds are largely unregulated and shrouded in secrecy, they’ve developed a mystique and attract that may beguile even probably the most skilled investor. In Hedge Funds, Andrew Lo–one of many world's most revered monetary economists–addresses the urgent want for a scientific framework for managing hedge fund investments.
Arguing that hedge funds have very totally different danger and return traits than conventional investments, Lo constructs new tools for analyzing their dynamics, together with measures of illiquidity publicity and efficiency smoothing, linear and nonlinear danger fashions that capture various betas, econometric fashions of hedge fund failure charges, and built-in funding processes for various investments. In a brand new chapter, he appears at how the methods for and regulation of hedge funds have modified in the aftermath of the monetary disaster.