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Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Hedge Funds: Past, Present, and Future

  • René M. Stulz
Journal of Economic Perspectives
vol. 21, no. 2, Spring 2007
(pp. 175–194)
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Abstract

Assets managed by hedge funds have grown faster over the last ten years than assets managed by mutual funds. Hedge funds and mutual funds perform the same economic function, but hedge funds are largely unregulated while mutual funds are tightly regulated. This paper compares the organization, performance, and risks of hedge funds and mutual funds. It then examines whether one can expect increasing convergence between these two investment vehicles and concludes that the performance gap between hedge funds and mutual funds will narrow, that regulatory developments will limit the flexibility of hedge funds, and that hedge funds will become more institutionalized.

Citation

Stulz, René, M. 2007. "Hedge Funds: Past, Present, and Future." Journal of Economic Perspectives, 21 (2): 175–194. DOI: 10.1257/jep.21.2.175

JEL Classification

  • G11 Portfolio Choice; Investment Decisions
  • G18 General Financial Markets: Government Policy and Regulation
  • G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
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