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White Paper

Is Your Equity Hedge Fund Portfolio Resilient Enough for Uncertain Times?

We analyze the historical macroeconomic sensitivity of traditional asset classes and major hedge fund strategies. We show that the average hedge fund is unlikely to provide meaningful diversification during periods of macro uncertainty, which are also typically difficult for traditional assets. However, long/short low-risk strategies have tended to exhibit low macro sensitivity.

Journal Article

Taxes, Charity, and Hedge Funds: Tax Implications of Charitable Contributions of Leveraged Partnership Interests

As a result of recent Treasury regulations, investors in investment partnerships, such as hedge funds, might end up recognizing capital gains when they contribute their partnership interests to a charity. We explain how such taxable gains upon charitable contributions arise and quantify how punitive they might be.

Journal Article

Limitation on Trader Fund Losses under the CARES Act of 2020

We explain how hedge fund investors might be affected by a limitation on excess business losses codified in recent tax legislation. In order to allocate business losses a hedge fund now must be a trader fund. After explaining the relationship between hedge fund losses and business losses, we illustrate with simple examples how the new provisions may affect hedge fund investors.

Perspective

The Hedgie in Winter

Cliff explains once again why hedge fund returns shouldn’t be compared to 100% long equities, how to do a more proper comparison, and then shares results.

Perspective

Hedge Funds Search for Their Real Killers

After decades of being one of the very early hedge fund critics, Cliff Asness has recently (tepidly) defended hedge funds from overwrought attacks that wrongly compare them to a beta of 1.0 in a bull market.

Perspective

Response to Miles Johnson

Cliff disagrees with the ways certain members of the press have established their annual lists of the top hedge fund earners. In his view, the math was simply bad and intentionally misleading.

Perspective

Hedging on Hedge Funds (postscript on correlations, beta, and “alpha”)

After Cliff's last piece on hedge funds, there were a lot of questions about “beta” versus “correlation” with the market and, more generally, about “alpha.” He demonstrates why correlation and beta are not the same.

Perspective

Hedging on Hedge Funds

Cliff Asness discusses how the current criticism toward hedge fund performance is often off-point, though reiterates his earlier argument that most hedge funds are too correlated with equity markets and too expensive.

Perspective

An Annual Article About Nothing

Cliff examines a popular front-page New York Times article covering the top hedge fund earners.

Perspective

Efficient Inefficiency: The Oxymoron That Explains the Investing World

Lasse Pedersen's new book, Efficiently Inefficient, is almost too good at laying out how successful professional asset managers think and act.