Cohen’s Comeback Revisited

In a follow-up to an article it published a few days earlier, Bloomberg recently reported that hedge fund manager Steven Cohen “is preparing to raise as much as $10 billion from outside investors in 2018 for a new fund.” The move, the article says, would represent an “extraordinary turnaround” for Cohen, particularly given that his former firm, SAC, got bad press four years ago on its guilty plea to insider trading for which it paid a “record $1.8 billion penalty.” The article suggests that Cohen’s efforts could be an attempt to save face with investors, but argues that if he […]

Higher Fund Assets Can Lead to Poorer Fund Performance

Research recently released by Duke University shows that “greedy” funds with rising asset levels can return poorer performance for investors, according to an article in Institutional Investor. Evidence presented in a new study by researchers at Duke University and Texas A&M University indicates that “alpha diminishes significantly as individual funds grow and as industry assets under management rise,” the article says. Higher assets lead to higher income from management fees and profits, it says, but this can translate into underperformance for investors. The study analyzed data from domestic equity funds for the period between 1991 and 2001 and found that, […]