The spectacular investment returns of the hedge fund industry were thrown into doubt yesterday as Barclays Capital said the figures were being exaggerated by as much as 6 percentage points a year, reports the Times .
The flattering picture of the industry had emerged as a result of imperfections in the way many hedge fund indices were compiled, Barclays said. The investment bank put the typical level of overstatement at 1 to 6 percentage points per year, depending on the index. Even an overstatement of 1% per year would mean hedge funds — billed as the best-performing asset class over ten years — had in fact been outpaced by shares. The paper says if it were as much as 6%, it would mean hedge funds were in fact producing less than half the annual investment returns of 11% to 12% routinely claimed fo...
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