Opacity in Hedge Funds: Does it Create Value for Investors and Managers?
This paper investigates if opacity (as measured by derivatives usage) creates value for investors and the managers of hedge funds that charge performance fees. Since we do not identify a positive relation between opacity and managers’ revenue, it is not possible to state that opacity is a source of...
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| Format: | Article |
| Language: | English |
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FUCAPE Business School
2020-01-01
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| Series: | BBR: Brazilian Business Review |
| Subjects: | |
| Online Access: | http://www.redalyc.org/articulo.oa?id=123075326003 |
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| _version_ | 1825207299907518464 |
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| author | Flávia Januzzi Aureliano Bressan Fernando Moreira |
| author_facet | Flávia Januzzi Aureliano Bressan Fernando Moreira |
| author_sort | Flávia Januzzi |
| collection | DOAJ |
| description | This paper investigates if opacity (as measured by derivatives usage) creates value for investors and the managers of hedge funds that charge performance fees. Since we do not identify a positive relation between opacity and managers’ revenue, it is not possible to state that opacity is a source of manager’s value creation for hedge fund investors and managers. However, considering that opacity is positively associated with risk-taking and negatively related with investors’ adjusted returns, we suggest policies aiming at protecting investors, especially those less qualified. We examine a unique and comprehensive database related to the positions in derivatives taken by managers, which was enabled due to specific disclosure regulatory demands of the Brazilian Securities Exchange Commission, where detailed information on hedge funds’ portfolio allocation should be provided on a monthly basis. |
| format | Article |
| id | doaj-art-e0cab55f6a604ec2b1b1a5274c35e98f |
| institution | Kabale University |
| issn | 1807-734X |
| language | English |
| publishDate | 2020-01-01 |
| publisher | FUCAPE Business School |
| record_format | Article |
| series | BBR: Brazilian Business Review |
| spelling | doaj-art-e0cab55f6a604ec2b1b1a5274c35e98f2025-02-06T23:39:33ZengFUCAPE Business SchoolBBR: Brazilian Business Review1807-734X2020-01-01176640668http://dx.doi.org/10.15728/bbr.2020.17.6.3Opacity in Hedge Funds: Does it Create Value for Investors and Managers?Flávia JanuzziAureliano BressanFernando MoreiraThis paper investigates if opacity (as measured by derivatives usage) creates value for investors and the managers of hedge funds that charge performance fees. Since we do not identify a positive relation between opacity and managers’ revenue, it is not possible to state that opacity is a source of manager’s value creation for hedge fund investors and managers. However, considering that opacity is positively associated with risk-taking and negatively related with investors’ adjusted returns, we suggest policies aiming at protecting investors, especially those less qualified. We examine a unique and comprehensive database related to the positions in derivatives taken by managers, which was enabled due to specific disclosure regulatory demands of the Brazilian Securities Exchange Commission, where detailed information on hedge funds’ portfolio allocation should be provided on a monthly basis.http://www.redalyc.org/articulo.oa?id=123075326003value creationopacityhedge funds |
| spellingShingle | Flávia Januzzi Aureliano Bressan Fernando Moreira Opacity in Hedge Funds: Does it Create Value for Investors and Managers? BBR: Brazilian Business Review value creation opacity hedge funds |
| title | Opacity in Hedge Funds: Does it Create Value for Investors and Managers? |
| title_full | Opacity in Hedge Funds: Does it Create Value for Investors and Managers? |
| title_fullStr | Opacity in Hedge Funds: Does it Create Value for Investors and Managers? |
| title_full_unstemmed | Opacity in Hedge Funds: Does it Create Value for Investors and Managers? |
| title_short | Opacity in Hedge Funds: Does it Create Value for Investors and Managers? |
| title_sort | opacity in hedge funds does it create value for investors and managers |
| topic | value creation opacity hedge funds |
| url | http://www.redalyc.org/articulo.oa?id=123075326003 |
| work_keys_str_mv | AT flaviajanuzzi opacityinhedgefundsdoesitcreatevalueforinvestorsandmanagers AT aurelianobressan opacityinhedgefundsdoesitcreatevalueforinvestorsandmanagers AT fernandomoreira opacityinhedgefundsdoesitcreatevalueforinvestorsandmanagers |