Hedge funds performance: analysis of explanatory factors

The industry of hedge funds is considered to be one of the most unregulated and volatile segment of global financial markets. Since 2014, on average, hedge funds have been underperforming major benchmark for the broad market performance – S&P 500. Presence of such descending trend in the performance of the hedge funds motivated us to research this topic, aiming to analyze the factors, which could explain the general trend over the long-run. In this research, within the applied statistical framework, we analyzed the behavior of factors, which could explain performance of the hedge funds. Targeting to understand whether there exists any pattern of such factors’ behavior, our study covered seven different time frameworks of crisis and precrisis periods in global financial markets, using four investment strategies employed by the hedge funds.