The Performance Of Hedge Fund Relatively In UK - Free Essay Example

Sample details Pages: 16 Words: 4728 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Essay any type Did you like this example? 1.1-Introduction: Hedge funds are actively managed portfolios that hold positions in publicly traded securities. Gaurav S. Amin and Harry M. Don’t waste time! Our writers will create an original "The Performance Of Hedge Fund Relatively In UK" essay for you Create order Kat (2000) stated on their report that à ¢Ã¢â€š ¬Ã…“A hedge fund is typically defined as a pooled investment vehicle that is privately organized, administrated by professional investment managers, and not widely available to the publicà ¢Ã¢â€š ¬?. It charges both a performance fee and a management fee. It allows a flexible investment for a small number of large investors (usually the minimum investment is $1 million) can use high risk techniques. 1Now days it is very clear that in the matter of alternative investment mutual fund is not performing well. As a high absolute returns and typically have features such as hurdle rates and incentive fees with high watermark provision hedge fund gives a better align to the interests of managers and investors. 2Moreover mutual funds typically use a long-only buy-and-hold type strategy on standard asset classes, which help to capture risk premia associate with equity risk, interest rate risk, default risk etc. However, they are not very help ful in capturing risk premia associate with dynamic trading strategies. That is why hedge fund comes into the picture. In the year of 2009, this takes the greatest history of the world in the following century. In the year of 2008 the world saw the greatest fall down of the world economy. Lots of people missing their jobs, lots of company were stopped. The world economy faced the highest losses in the history. These all factors are showing only one way to makeover from that greatest downfall that is hedging. 3The last couple of decades have witnessed a rapidly growing in the hedge funds. Relative to traditional investment portfolios hedge funds exhibit some unique characteristics; they are flexible with respect to the types of securities they hold and the type of the position they take. 1 Agarwal, V. and Naik, N. (2000). à ¢Ã¢â€š ¬Ã…“Multi-period performance persistence analysis of hedge fund sà ¢Ã¢â€š ¬?. The journal of financial and quantitative analysis. Vol. 35, No,3. PP-327. 2 Agarwal, V. and Naik, N. (2004). à ¢Ã¢â€š ¬Ã…“Risks and portfolio decisions involving hedge fundsà ¢Ã¢â€š ¬?. The review of financial studies, Vol. 17, No.1. PP-64. 3 Journal of banking and finance 32(2008) 741-753- à ¢Ã¢â€š ¬Ã…“Hedge Fund Pricing and Model Uncertaintyà ¢Ã¢â€š ¬? by Spyridan D. Vrontos, Ioannis D. Vrontos, Daniel Giomouridies. Since the early 1990s, hedge funds have become an increasingly popular asset class. The amount invested globally in hedge funds rose from approximately $50 billion in 1990 to approximately $1 trillion by the end of 2004. And because these funds characteristically use stantial leverage, they play a far more important role in the global securities markets than the size of their net assets indicates. Moreover, investments in hedge funds have become an important part of the asset mix of institutions and ever wealthy individual investors (Malkiel, B. and Saha, A. (2005). 4The number of FOHFs increase by 40% between 2001 and 2003, and now comprised almost two third of the $650 billion invested in the USAà ¢Ã¢â€š ¬Ã¢â€ž ¢s hedge fund market. Due to its nature it is difficult to estimate the current size of hedge fund industry. 5Van Hedge Fund Advisors estimates that by the end of 1998 there were 5380 hedge fund managing $311 in capital, with between $800 billion and $1 trillion in total assets, which indicates the higher number of recent new entries. So far, hedge fund is based on American phenomena. About 90% hedge fund managers are based in the US, 9% in Europe and 1% in Asia and elsewhere. Now a dayà ¢Ã¢â€š ¬Ã¢â€ž ¢s around 5883 hedge funds are trading around the world. (*Barclay Hedge database). Chart 1: Assets of Hedge fund industry from 1997 to 2009. Source: https://www.barclayhedge.com/research/indices/ghs/mum/Hedge_Fund.html According to the Barclay hedge database the asset of hedge fund industry is $1205.6 billion dollar. 4 Fin ancial times, 29th October, 2003. www.vanhedge.com https://www.barclayhedge.com/products/hedge-fund-directory.html 1.2-Research questions: Specifically in this paper, I want to address two main questions. First one is what is the performance of hedge fund and FTSE100 over the period of 2001 to 2008? To evaluate the performance I use three traditional risk adjusted performance measurement model. To give a better idea and matter of easily understand I use the Sharp ratio, the Treynor ratio, and the Capital Asset Pricing Model (CAPM). However, the equity market index is not necessarily the right benchmark for hedge funds, therefore, market betas and abnormal returns may not be the appropriate measures for risks and profits. To mitigate this problem, I calculate sharp ratios, which are defined as the ratio of the average excess fund returns over the standard deviation. Second question is does hedge funds gives better return from UK equity market (FTSE100)? To make this comparison I use regression analysis where the correlation will show how the hedge funds act against the FTSE 100. 1.3-Objective of the study: The main objective of this study is to find out the performance of Hedge fund relatively with the UK equity market FTSE 100. In addition, I address in this paper four major hedge funds performance correlation with FTSE100. As a result an individual investor can easily understand which portfolio will give better return at their investment perspective. This study focuses on UK investorà ¢Ã¢â€š ¬Ã¢â€ž ¢s perspective only. In the past several years, lots of studies had been done on this area like Park and Staum (1998), Brown et al. (1999), Agarwal and Naik (2000), Herzberg and Mozes (2003), Capocci and Hubner (2004), and Malkiel and Saha (2005) analysis the hedge fund performance. Most of the statistical methodology is on the regression with equity markets and rest of all are in the cross product ratio. Above all they tried to find out the return of different types of hedge fund depending on the market risk and market return. So finally, the purpose of this paper is clearly esta blished, that is to understand hedge fund performance over the UK equity market (FTSE100). 1.5-Overview of the methodology: In this section I would like to describe an overview of my methodology. To find out the hedge fund performance and the FTSE100 marketà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance I use three traditional risk-adjusted performance measurement models. First one is the Sharpe ratio, secondly, the Treynor ratio and finally, the Capital Asset Pricing Model (CAPM). I address the Sharpe ratio and the Treynor ratio because these two gives better easy view for an investor to evaluate the hedge fund performance by themselves. However, the Sharpe ratio and the Treyneo ratio measure the excess return of per unit of risk for an investment asset. These two are used to understand how well the return of an asset compensates the investor for the risk taken. When comparing two assets each with the expected return of fund against the same benchmark with risk free return, the asset with the higher Sharpe ratio gives more return for the same risk. As a result investor can easily understand where to invest. In this paper I use total 287 funds including different types of hedge funds like- Event driven (31), Hedge fund (54), Global macro (37) and Market neutral (165). As a benchmark I use FTSE100 and for the risk free rate I use UK 10 year Treasury bond. All data were collected from the DataStream which is run by Thomson Reuters the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s leading source of intelligent information for businesses and professionals (https://thomsonreuters.com/). 1.6-Definition of the key terms: Hedge fund: In the early study by Francis C.C. Koh, Winston T.H. Koh , David K.C. Lee, Kok Fai Phoon (2004) stated in their report that à ¢Ã¢â€š ¬Ã…“Hedge Funds are innovative investment structures that were first created more than 50 years ago by Alfred Winslow Jones. He established a fund with the following features: (a) He set up à ¢Ã¢â€š ¬Ã…“hedgesà ¢Ã¢â€š ¬? by investing in securities that he determined as undervalued and funding these positions partly by taking short positions in overvalued securities, creating a à ¢Ã¢â€š ¬Ã…“market neutralà ¢Ã¢â€š ¬? position; (b) He also designed an incentive fee compensation arrangement in which he was paid a percentage of the profits realized from his clientsà ¢Ã¢â€š ¬Ã¢â€ž ¢ assets; and (c) He invested his own investment capital in the fund, ensuring that his incentives and those of his investors were aligned and forming an investment à ¢Ã¢â€š ¬Ã…“partnershipà ¢Ã¢â€š ¬?. Most modern hedge funds possess the abo ve listed features, and are set up as limited partnerships with a lucrative incentive-fee structure. In most hedge funds, managers also often have a significant portion of their own capital invested in the partnerships. The term à ¢Ã¢â€š ¬Ã…“hedge fundà ¢Ã¢â€š ¬? has been generalized to describe investment strategies that range from the original à ¢Ã¢â€š ¬Ã…“market-neutralà ¢Ã¢â€š ¬? style of Jones to many other strategies and opportunistic situations, including global/macro investing.à ¢Ã¢â€š ¬? On the other report by Liang, B. (1999) stated on his report that there are two major types of hedge funds, one is inshore and another is offshore. Onshore funds are limited partnerships of no more than 500 investors. Offshore funds are limited liability corporations or partnerships established in the tax neutral jurisdictions that allow investors an opportunity to invest outside their own country and minimize their tax liabilities. Due to the large variety of hedge fund inve sting strategies, there is no standard method to classify hedge funds smartly. There are at least 8 major databases set up by data vendors and fund advisors. I follow the classification used by Eichengreen and Mathieson (1998), which relied on the MAR/Hedge database. Under this classification, there are 8 categories of hedge funds with 7 differentiated styles and a fund-of-funds category. For my paper I chose three different categories, which are as follows: (a) Event driven funds. These are funds that take positions on corporate events, such as taking an arbitraged position when companies are undergoing re-structuring or mergers. For example, hedge funds would purchase bank debt or high yield corporate bonds of companies undergoing re-organization (often referred to as distressed securities). Another event-driven strategy is merger arbitrage. These funds seize the opportunity to invest just after a takeover has been announced. They purchase the shares of the target companies and short the shares of the acquiring companies. (c) Global/Macro funds refer to funds that rely on macroeconomic analysis to take bets on major risk factors, such as currencies, interest rates, stock indices and commodities. Opportunistic trading manager that makes profits from changes in global economies typically based in major interest rate shifts. To make profits managers uses leverage and derivatives. (d) Market neutral funds refer to funds that bet on relative price movements utilizing strategies such as long-short equity, stock index arbitrage, convertible bond arbitrage and fixed income arbitrage. Long-short equity funds use the strategy of Jones by taking long positions in selective stocks and going short on other stocks to limit their exposure to the stock market. Stock index arbitrage funds trade on the spread between index futures contracts and the underlying basket of equities. Convertible bond arbitrage funds typically capitalize on the embedded option in these bon ds by purchasing them and shorting the equities. Fixed income arbitrage bet on the convergence of prices of bonds from the same issuer but with different maturities over time. This is the second largest grouping of hedge funds after the Global category. Source Eichengreen and Mathieson (1998). 2.1.2-Current scenario of hedge funds: Chapter two Literature review: 2.1-History of hedge fund Despite the increasing interest and recent development, few studies have been carried out on hedge funds comparing to other investment tools like mutual funds. à ¢Ã¢â€š ¬Ã…“An analysis of Hedge Fund performance 1984-2000à ¢Ã¢â€š ¬? by Capocci Daniel using one of the greatest hedge fund database ever used on his working paper (2796 individual funds including 801 dissolved), to investigate hedge funds performance using various asset-pricing models, including an extension from of Carhartà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1997) model combined with Fama and French (1998), Agarwal and Naik (2000) models that take into account the fact that some hedge funds invest in emerging market bond. At the end they found that their model does a better job describing hedge funds behaviour. That appears particularly good for the Event Driven, Global Macro, US Opportunistic, Equity non-Hedge and Sector funds. Since the early 1990s, when around 2000 hedge funds were managing assets totalling capital of $60 bil lion, the subsequent growth in the number and asset base of hedge funds has never really been refuted. The industry only suffered from a relative slowdown in 1998, but since then has enjoyed a renewed vitality with an estimated total of 10,000funds managing more than a trillion US dollars by the end of 2006. The growing trend of the sector remained remarkably sustained during the stock market collapse that started in March 2000, when the NASDAQ composite Index reached an all-time high of 5,132 and finished three years later with a floor level of 1,253. In the meantime, the global met asset value (NAV) of hedge funds continued to grow at a steady rate of 10.6% (Van Hedge Funds Advisors International, 2002), contrasting with a decrease of 2.7% in the worldwide mutual fund industry ( Investment Company Institute, 2003). In 2001, Capocci and Hubner(2004) estimated that there were 6,000 hedge fund managing around $400 billion. In 2007, Capocci, Duquenne and Hubner (2007) estimated that t here were 10,000 hedge funds managing around $1 trillion. This is a growth of 11% in the number of funds and 26% in assets over six years (6PhD thesis paper by Daniel P.J. Capocci). Other studies from practitioners Hennessee (1994), and Oberuc (1994) also showed an evidence of superior performance in the case of hedge funds. Ackernann and Al. (1999) and Liang (1999) who compared the performance of hedge funds to mutual funds and several indices, found that hedge funds constantly obtained better performance than mutual funds. Their performance was not better than the performance of the market indices considered. They also indicated that the returns in hedge funds were more unstable than both the returns of mutual funds and those of market indices. According to Brown and Al. (1997) hedge funds showing good performance in the first part of the year reduce the volatility of their portfolio in the second half of the year (Capocci Daniel- An analysis of hedge fund performance 1984-2000 ). Taking all these results into account hedge funds seems a good investment tool. 6 PhD thesis paper by Daniel P.J. Capocci. Electronic copy available at: http//ssrn.com/abstract=1008319. 2.1.1-Facts and finding of development in hedge funds: As a result of flexible investment strategies, a better manager inventive alignment, sophisticated investors, and limited SEC regulations hedge funds have gained incredible popularity. In the report of Agarwal, V. and Naik, N. (2004) stated that à ¢Ã¢â€š ¬Ã…“it is well accepted that the world of financial securities is a multifactor world consisting of different risk factors, each associated with its own factor risk premium, and that no single investment strategy can span the entire risk factor space. Therefore investors wishing to earn risk premia associated with different risk factors need to employ different kinds of investment strategies. Sophisticated investors, like endowments and pension funds, seem to have recognized this fact as their portfolios consist of mutual funds as well as hedge funds.1 Mutual funds typically employ a long-only buy-and-hold-type strategy on standard asset classes, and help capture risk premia associated with equity risk, interest rate risk, defau lt risk, etc. However, they are not very helpful in capturing risk premia associated with dynamic trading strategies or spread-based strategies. This is where hedge funds come into the picture. Unlike mutual funds, hedge funds are not evaluated against a passive benchmark and therefore can follow more dynamic trading strategies. Moreover, they can take long as well as short positions in securities, and therefore can bet on capitalization spreads or value-growth spreads. As a result, hedge funds can offer exposure to risk factors that traditional long-only strategies cannotà ¢Ã¢â€š ¬?. However, investor can create exposure like hedge funds by trading on their own account, in practice they encounter many frictions due to incompleteness of markets like the publicly traded derivatives market and the financing market. Moreover, the derivatives market for standardized contracts has grown a great deal in recent years, still it is very costly for an investor to create a customized payof f on individual securities. The same is true for the financing market as well, where investors encounter difficulties shorting securities and obtaining leverage. These frictions make it difficult for investors to create hedge fund-like payoffs by trading on their own accounts. According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) à ¢Ã¢â€š ¬Ã…“in 1990, the entire hedge fund industry was estimated at about US$20 billion. At of 2004, there are close to 7000 hedge funds worldwide, managing more than US$830 billion. Additionally, about US$200-300 billion is estimated to be in privately managed accounts. While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of hedge funds and other hedge fund-linked products are increasingly being marketed to the retail market. While hedge funds are well established in the United States and Europe, they have only begun to grow aggressively in As ia. According to Asia Hedge magazine, there are more than 300 hedge funds operating in Asia (including those in Japan and Australia), of which 30 were established in year 2000 and 20 in 2001. In 2003, 90 new hedge funds were started in Asia, compared with 66 in 2002, according to an estimate by the Bank of Bermuda. In 2004 more than US$15 billion, hedge fund investments in Asia are expected to grow rapidly. Several factors support this view. Asian hedge funds currently account for a tiny slice of the global hedge fund pie and a mere trickle of the total financial wealth of high net worth individuals in Asiaà ¢Ã¢â€š ¬?. Hedge funds have posted attractive returns. From 1987 to 2001, the Hennessee Hedge Fund Index posted annualised returns of 18%, higher than the SPà ¢Ã¢â€š ¬Ã¢â€ž ¢s 13.5%. Hedge funds are seen as a natural à ¢Ã¢â€š ¬Ã…“hedgeà ¢Ã¢â€š ¬? for controlling downside risk because they employ exotic investment strategies believed to generate returns that are uncorrel ated to traditional asset classes. Hedge funds vary in their strategies. So-called macro funds, such as Quantum Fund, generally take a directional view by betting on a particular bond market, say, or a currency movement. Other funds specialize in corporate events, such as mergers or bankruptcies, or simply look for pricing anomalies the stock markets. Hedge funds vary widely in both their investment strategies and the amount of financial leverage. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) There are a number of factors behind the meteoric rise in demand for hedge funds. The unprecedented bull-run in the US equity markets during the 1990s expanded investment portfolios. This led an increased awareness on the need for diversification. The bursting of the technology and Internet bubbles, the string of corporate scandals that hit corporate America and the uncertainties in the US economy have led to a general decline in stock markets worldwide. This in turn provided fresh impetus for hedge funds as investors searched for absolute returns. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Unlike registered investment companies, hedge funds are not required to publicly disclose performance and holdings information that might be construed as solicitation materials. Since the early 1990s, there has been a growing interest in the use of hedge funds amongst both institutional and high net worth individuals. Due to their private nature, it is difficult to obtain adequate information about the operations of individual hedge funds and reliable summary statistics about the industry as a whole. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Hedge funds are known to be growing in size and diversity. As at the end of 1997, the MAR/Hedge database recorded more than 700 hedge fund managing assets of US$90 billion. This is only a partial picture of the industry, as many funds are not listed with MAR/Hedge. In practical terms, it is not easy to estimate the current siz e of the hedge fund industry unless all funds are regulated or obligated to register their operations with a common authority. Brooks and Kat (2001) estimated that, as at April 2001, there are around 6000 hedge funds with an estimated US $400 billion in capital under management and US $1 trillion in total assets. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) à ¢Ã¢â€š ¬Ã…“three interesting features differentiate hedge funds from other forms of managed funds. Most hedge funds are small and organized around a few experienced investment professionals. In fact, more than half of U.S Hedge Funds manage amounts of less than US$25 million. Further, most hedge funds are leveraged. It is estimated that 70 per cent of hedge funds use leverage and about 18% borrowed more than one dollar for every dollar of capital. (See Eichengreen and Mathieson (1998). Another peculiar feature is the short life span of hedge funds. Hedge funds have an average life span of about 3.5 years (See Stefano Lavinio (2000) pp 128). Very few have a track record of more than 10 years. These features lead many to view hedge funds, as à ¢Ã¢â€š ¬Ã…“riskyà ¢Ã¢â€š ¬? and à ¢Ã¢â€š ¬Ã…“opportunisticà ¢Ã¢â€š ¬?. In the early study by Fung and Hsieh (2001), they use option like payoffs to view the risks of trend following hedge funds. They saw that the trend followers are typically commodity trading advisors (CTAs) who attempt to profit from trends in commodity prices using technical indicators. According to Fung and Hsieh (2001) trend followers are particularly interesting in that not only are their returns uncorrelated with the standard equity, bond, currency, and commodity indices, but their returns tend to exhibit option like features. They tend to be large and positive during the best and worst performing months of world equity indices. They cite evidence by Fung and Hsieh (1997) who show that if one divided up the states o f the world into five states based on the return on the MSCI equity world index, trend followers tend to outperform when the MSCI equity return is at its lowest and highest. The relationship between trend followers and the equity market is non-linear and U-shaped. Although returns of trend following funds have a low beta against equities on average, the state-dependent betas tend to be positive in up-markets and negative in down markets. As a result, Fung and Hsieh (2001) assume that the simplest trend following strategy has the same payout as a structured option known as the à ¢Ã¢â€š ¬Ã…“look back straddle.à ¢Ã¢â€š ¬? The owner of a look back call option has the right to buy the underlying asset at the lowest price over the life of the option. Similarly, a look back put option allows the owner to sell at the highest price. The combination of these two options is the look back straddle, which delivers the ex-post maximum payout of any trend following strategy. Fung and Hsieh (2001) then demonstrate empirically that look back straddle returns resemble the returns of trend following hedge funds. Building on this pioneer work, Fung and Hsieh (2004) propose seven factors that explain aggregate hedge fund returns. These seven factors include the excess return on the SP 500 index, the Wilshire small cap minus large cap index return, the term spread, the credit spread, and trend following factors for bonds, currencies, and commodities. They show that their seven factor model well explains variation in aggregate hedge fund returns. In addition, they find that equity long/short hedge funds tend to load positively on the SP 500 index factor and the small cap minus large cap factor. These results are consistent with the observation that equity long/short hedge funds typically have a small positive exposure to stocks and tend to be long small stocks and short large stocks. Fung and Hsieh (2004) also find that fixed income funds on the other hand tend to load neg atively on the change in the credit spread, where the credit spread is measured as the difference between the yield on Moodyà ¢Ã¢â€š ¬Ã¢â€ž ¢s Baa bonds and the yield on the 10-year constant maturity Treasury bond. The reason is that fixed income funds typically buy bonds with lower credit ratings and/or less liquidity and then hedge the interest rate risk by shorting US Treasury bonds, which have the highest credit rating and are more liquid. However, Agarwal and Naik (2004) also propose a multi-factor model to explain hedge fund risks. They find that non-linear option like payoffs are not restricted to trend followers and risk arbitrageurs, but are an integral feature of payoffs for a wide range of hedge fund strategies. In particular they observe that the payoffs on a large number of hedge fund strategies look like those from writing a put option on the equity index. These strategies include risk arbitrage, distressed debt, convertible arbitrage, and relative value arbitrage. Consistent with the exposure of these strategies to the risks borne by sellers of equity index put options, Agarwal and Naik (2004) find that these hedge funds suffer from significant left tail risk which tends to coincide with severe market downturns. The performance of hedge fund in 2008 was very shocking like more than ten years ago. Teo, M (2009) stated that in the month of August 1998 alone LTCM lost 45% of its capital in the wake of the massive liquidity event triggered by the Russian rubble default. Lots of academic literature has shown that the year 2007 and 2008 was the worst performance of hedge fund. As we know that hedge fund managers make portfolio by taking position in equity market and another fund, but unfortunately the world equity market goes downside. As a result investors who wish to weather future financial maelstroms should take note of the non-linear relationship between hedge fund returns and the equity market. 2.3-Limitations (previous) With respect to lightly regulated investment vehicles with great treading flexibility, hedge funds often pursue highly sophisticated investment strategies. Hedge funds promise absolute returns to their investor leading to a belief that they hold factor-neutral portfolios. With this in mind, hedge funds have some limitations. In the early studies many researchers discussed and explain that obstacles. First of all if we consider the measurement model of hedge funds performance, most of the researcher use traditional performance measure model like, Sharpe ratio, Treynor ratio and Jensen alpha which are not adequate for the performance evaluation of hedge funds. Fung and Hsieh (2000) and Roy (2003) stated that is incorrect to use these performance measures t evaluate the hedge funds strategies. Brooks and Kat (2002), Kat (2003), Mahdavi (2004) and Murguia and Umemoto (2004) also mentioned that the Sharpe ratio does not represent the true performance of hedge funds because it does no t take into consideration the asymmetry returns of these funds. As a result Perello (2007) propose to use the downside risk framework like Sortino ratio, the upside potential ratio and Omega measure as alternative performance measure. Moreover, Chung, Rosenberg and Tomeo (2004) and Scherer (2004) showed that Sortino ratio makes it possible to the investors to evaluate the risk and the performance of the hedge funds more sustainably than Sharpe ratio. Secondly, according to Ackermann et al. (1999) and to Fung and Hsieh (2000), two upward biases exist in the case of hedge funds. They do not exist in the case of mutual funds, and they both have an opposite impact to the survivorship bias. Survivorship bias is an important issue in hedge funds performance studies (see Carhart and al. 2000). This bias is present when a database contains only funds that have data for the whole period studies. In this case, there is a risk of overestimating the mean performance because the funds that wo uld have ceased to exist because of their bad performance would not be taken into account. The two upward biases exist because, since hedge funds are not allowed to advertise, they consider inclusion in a database primarily as a marketing tool. The first phenomenon stressed by Ackermann and al. (1999) and called the self-selection bias is present because funds that realize good performance have less incentive to report their performance to data providers in order to attract new investors. Malkiel, B. and Saha, A. (2005) stated in their report that à ¢Ã¢â€š ¬Ã…“Databases available at any point in time tend to reflect the returns earned by currently existing hedge funds but they do not include the returns from hedge funds that existed at some time in the past but are presently not in existence (i.e., the truly dead funds) or exist but no longer report their results (the defunct funds). Unsuccessful hedge funds have difficulties obtaining new assets. Hence, they tend to close, leavi ng only the more successful funds in the database. But some funds stop reporting not because they are unsuccessful but because they do not want to attract new investmentà ¢Ã¢â€š ¬?. The second point called instant history bias or backfilled bias (Fung and Hsieh 2000) occurs because after inclusion a fundà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance history is backfilled. This may cause an upward bias because funds with less satisfactory performance history are less likely to apply for inclusion than funds with good performance history (Capocci Daniel 2001, An analysis of hedge fund performance 1984- 2000).

Comparing France and Us Criminal Justice System Essay

There many different criminal justice systems in the world today. Some that consists of many of the same policies and some that are considerably different. In the case of France and the U.S. there are a lot of similarities, but I will be focusing on the differences between each of their systems. The aspects that I will be comparing are police, courts, the legal profession, legal education, criminal procedural law, corrections, and juvenile justice and the advantages and disadvantages of each. The policing system in France is a lot different than the one in the U.S. In France there is one big centralized police system run by the government. Unlike the fragmented police model, which is found in the United States and is attributed to the†¦show more content†¦Another difference between the two countries is their court system. France does not practice judicial review. In the United States, the Supreme Court has the principle responsibility of ruling on the constitutionality of all laws. This kind of judicial review is not practiced in France (Terrill 232). In France they have the Constitutional council which has nine members serving a nine year term, they are responsible for election complaints and the legislation made in parliament. The advantage of this is that it reduces the conflict of jurisdictions. But the disadvantage is that our Supreme Court has a longer term than the Constitutional Council which allows more constant laws and fewer laws that will contradict e ach other. The aspect of legal profession and legal education is also extremely different. To become a judge in France you must first obtain a law degree from a university law school. Next you must gain admission to the National School for the Judiciary at Bordeaux (Terrill 236). After completing this school, the candidate is now qualified to become a judge. The French system allows judges to begin their profession at an early age which could be a disadvantage because of lack of experience in the system, where judges in the United States are usually older and more knowledgeable. The legal education is noticeably different from America. In France, students enter a universityShow MoreRelatedHigh Rate Of Violence Throughout The World1400 Words   |  6 PagesThis report will discuss the high rate of violence in prison systems throughout the world. The report will identify three legal standards and/or operational procedures that are emerging around the globe that govern correctional professional practices within corrections systems and could be applied to the South American prison system. The United States will be a point of reference to compare and differentiate with other countries on legal standards and operational producers. The report will also evaluateRead MoreThe Legal System Of The Law1559 Words   |  7 Pagesportions of the legal system. Laws are made in order to give us rules of conduct that protect everyone’s individual rights (Canada Department of Justice). How law is dealt with is seen to vary throughout different countries for the reason that each country contains different laws that are based to fit their culture and customs. However, when law is dealt with, regardless of the area it is enforced in; if the crime of the accused is serious enough it will go through a trial system which is also seenRead MoreCost Proposed By Mangalore And Knapp1191 Words   |  5 Pagesdirect and tangible costs incurred by schizophrenia would be from health services, social care, unemployment, tax forgone, premature mortality, unpaid care, institutional costs, private expenditures, criminal justice services and other public expenditures such as social security payment and security system. All these are shouldered by the society and public sector. Health services mainly comprise of hospitalisation, medication, psychiatric services; costs in social care mainly involve nursing and institutionalisationRead MoreNotes On Crime Rates And Juvenile Delinquency3087 Words   |  13 Pagesthat they want to terminate the problem completely and do not want to face the issue by offering help such as detention centers. If death penalties for juveniles did happen, he says that our country would look really bad compared to other countries. Justice Thurgood Marshall says,The question with which we must deal is not whether a substantial proportion of American citizens would today, if polled, opine that capital punishment is barbarously cruel, but whether they would find it to be so in lightRead MoreThe Sandy Hook Elementary Shooting2067 Words   |  9 Pages1994 to 6.9 in 2004. When comparing gun homicides annually, Japan has less than fifty, along with Germany/Italy/France who each have less than one hundred fifty, and Canada has less than tw o hundred. On the other hand, over ten thousand people are killed by firearms each year in this country which averages out to be more than thirty people being shot and killed each day. Gun violence impacts society in multiple ways from medical costs, costs of the criminal justice system, security precautions suchRead MoreEssay on Gathering the Facts at the Crime Scene3234 Words   |  13 Pagesin the reality solving homicides is not as one would see on their favorite police show. As mention previous, the intrigue with police shows on television make it difficult to found a jury that have not seen those type show. Therefore, the court system has a problem obtaining a guilty verdict because jurors wrongfully acquit guilty defendants when no scientific evidence has been presented, as they have seen on television. As Donald Shelton states in â€Å"the CSI Effect: Does It Exist† this so-calledRead MoreEssay on Black Panther Party2252 Words   |  10 Pagesradical militant ideals of Malcolm X and Che Guevara. From the doctrines of Maoism they saw the role of their Party as the frontline of the revolution and worked to establish a unified alliance, while from Marxism they addressed the capitalist economic system, and exemplified the need for all workers to forcefully take over means of production (Baggins, Brian). Mao was important to the Black Panthers because of his different stance on Marxism-Leninism when applied to Chinese peasants. The founders of theRead MoreUS Intelligence Sees Cyber Threats Eclipsing Terrorism: An Analysis6653 Words   |  27 PagesEclipsing Terrorism The issue of security is no longer an aspect that easily definable or that can be controlled through traditional means. During the Cold War era, security was defined in terms of the nuclear threat and that of global war in the bipolar system. Today, and especially after the 2001 terrorist attacks over the United States, the issue of terrorism has become rather debated and is seen as the main threat to security. Even so, recent events have placed yet another major threat on top of theRead MorePolice Efficiency and Effectiveness6591 Words   |  27 PagesASSESSMENT OF THE ORGANIZATIONAL EFFICIENCY AND EFFECTIVENESS OF LEON PNP THROUGH A COMPARATIVE STUDY OF CRIMINAL CASES SOLVED AND CLEARED AS OF YEAR 2009 TO 2013 An Undergraduate Research Paper Presented to: Mr. Hanibal E. Camua Division of Social Sciences University of the Philippines Visayas Miagao Campus, Iloilo In Partial Fulfillment of the Requirements In Political Science 14 Philippine Politics and Government By John Mark C. Calves Jonathan V. Magan Arielle Lois C. Robles Read MoreSocial Policy, Social Welfare, and the Welfare State11346 Words   |  46 Pagesmanagement of risk Social inclusion Social policy as administrative and ï ¬ nancial arrangements Social policy as social administration Social policy as public ï ¬ nance Social policy as outcomes Social welfare The welfare state Deï ¬ ning the welfare state Comparing types of welfare state The development of the welfare state A consequence of industrialization or of political competition? Conclusion: Has the ‘golden age’ of the welfare state passed? FURTHER READING USEFUL WEBSITES ESSAY QUESTIONS 8 8 8 10 12

Waze-Analytical Proposition Free Essays

Strategic Value of Information Technology – CRM / Analytics Waze- Analytics Proposition 1. waze currently gathers the following data on its clients: GPS data – where users are and when, the application learns the users driving routes in order to give them the best personalized route to their destination. 2. We will write a custom essay sample on Waze-Analytical Proposition or any similar topic only for you Order Now We propose to add new data regarding user’s personal characteristics and consumer preferences. Once the system detects that the user has stopped in a spot of interest – shopping center, gas station etc. a short questionnaire will pop up. This will include 2-4 questions regarding user characteristics and preferences relevant to specific place. In return to answering the questions user will receive points – user who gains a certain number of points will receive an e-coupon as an incentive to cooperate. For example – User stops at a specific shopping center and following questionnaire pops up: 1. Gender: Female / Male 2. Age group: 18-22 / 23-30 / 30-40 / 40-50 / over 50 3. What stores do you plan to shop at? A list of participating stores in the shopping center 4. A specific question regarding one of the stores chosen by user in Q3. The final lists of questions will, of course, be devised by our marketing specialists. 3. Together with current user data regarding – time and place the additional demographic data and consumer preferences collected provide businesses with a unique set of valuable marketing information. Waze can collect the information and sell it to different businesses which will analyze it for their specific need. An example of how this data can be useful: â€Å"Paz† and their â€Å"Yellow† convenience stores might decide to purchase consumer data from waze. Then they might find out that at a certain location between 2 to 4 PM a large amount of mothers of young children consistently stops at the competing â€Å"Delek† gas station across the street. Then â€Å"Paz† will decide to advertise via waze a diapers sale at â€Å"Yellow† at this location during these hours, thus attracting the mothers to fill their tanks at â€Å"Paz† and shop at â€Å"Yellow†. This way waze wins twice – first it gets paid for the data that they collect and then they get paid again for the focused advertising through their application. How to cite Waze-Analytical Proposition, Essay examples

Market Mechanism and Trading Company

Question: Describe how you will obtain the knowledge to undertake this project detailing your sources of research and expected timeframe. Answer: 1. Like any other sector, call centre industry also has evolved in a major way with the time. It has been assessed that technological evaluation has also influenced the organization to focus on the advanced technologies to handle any type of queries of the client in an appropriate way. As per the article by Upadhya and Vasavi (2012), call centres works as a bridge between the business firms and customers. It helps to resolve any kind of queries of the customers, which help business enterprises to maintain satisfaction at the desired level. For that reason, I have to utilize systematic procedure to gather knowledge to understand the process through which business procedures of the call centres has evolved. I will also focus on utilizing effective interview process among the employees to understand the kind of challenges they are facing with the outdated telephone system. I will also focus on utilizing qualitative face-to-face interview process to gather in-depth information about the research study. On the other hand, I will also like to conduct interview with the employees working in other call centres as well. I feel that that it will help me to understand the practical benefits of introducing advance technologies in an appropriate way. Furthermore, I will also have to focus on authentic secondary sources to gather knowledge about the advanced technologies used in the call centres (Schwartz, 2012). For instance, I will have to gather in-depth information about the technologies like Computer Telephony Integration, Automatic Call Distributor, Interactive Video, etc to understand the significance of utilizing advanced technologies. I feel that gathering in-depth information will allow me to execute changes in the current technologies in an appropriate way. Furthermore, I will also focus on capturing information about the time required for the initiation process of the advance technologies. For that reason, I will also talk with different technology expert to minimize the time req uired less than 2 week for implementing advance technologies in the working framework. 2. As per the article by Fotos and Browne (2013), effective implementation of new technologies in the operational process requires proper financial support. Otherwise, the entire transition process cannot be completed within a short span of time. Therefore, my first step will focus on ensuring proper financial backup from the management so that all the activities related to the change process can be initiated in an appropriate manner. For that reason, I will focus on estimating the total amount of expected cost that organization will have to invest for ensuring the new technologies in the operational process. After ensuring the financial section, I will focus on initiating the implementation process that creates minimum impact on the present operational process. Now, Venkatesh, Thong and Xu (2012) have highlighted the fact that utilization of advance technology creates maximum impact at the time when all the employees posses in-depth knowledge about the new technology. Therefore, I will suggest the management to provide proper training facilities to all the existing employees at the time of technological transition process, which will help to increase the quality of the existing provided services. Now, I will focus on the selecting specific individuals from the organization who required training most, as it will also help to increase the efficiency level of the operational process in a major way. For instance, effective utilization of new advanced technologies like Computer Technology Integration (CTI) and Automatic Call Distributor (ACD) requires in-depth knowledge from the employees (Clark et al., 2012). Otherwise, the prime objective of initiating new advanced technologies might not be fulfilled in an appropriate way. I will also focus on evaluating the exact number of instruments, which will be required for the transition process. I feel that purchasing of all the necessary instruments before the change process will help to complete the entire process within previously selected time period. In addition, I will also like to focus on selecting personnel with superior knowledge regarding the installation process of the advance technologies in call centre, which will help to fulfil all the requirements of the entire process within given timeframe. As per the article by Uhl (2012), collecting feedback from the employees is another important aspect of initiating new technologies in the operational process. It often helps to evaluate the necessary adjustment that organizations make to fulfil all the aims and objectives in an appropriate way. Thus, the implementation process of new technology will have to continue for certain timeframe so that employees do not have to face any type of challenges in future. As a result, it will eventually increase the effectiveness of the operational process of the call centre. References: Clark, C. M., Murfett, U. M., Rogers, P. S., Ang, S. (2012). Is empathy effective for customer service? Evidence from call center interactions.Journal of Business and Technical Communication, 1050651912468887. Fotos, S., Browne, C. M. (Eds.). (2013).New perspectives on CALL for second language classrooms. Routledge. Schwartz, R. A. (Ed.). (2012).The electronic call auction: Market mechanism and trading: Building a better stock market(Vol. 7). Springer Science Business Media. Uhl, D. M. A. (2012).Vision assessment: shaping technology in 21st century society: towards a repertoire for technology assessment(Vol. 4). J. Grin, A. Grunwald (Eds.). Springer Science Business Media. Upadhya, C., Vasavi, A. R. (Eds.). (2012).In an outpost of the global economy: Work and workers in India's information technology industry. Routledge. Venkatesh, V., Thong, J. Y., Xu, X. (2012). Consumer acceptance and use of information technology: extending the unified theory of acceptance and use of technology.MIS quarterly,36(1), 157-178.