Tuesday, January 18, 2011

Are hedge funds all buying the same stocks?

A study of hedge fund performance by Andrew Lo, an MIT researcher, shows that fund returns have been moving more closely together over the past five years, according to a WSJ report.

Lo’s analysis found a roughly 79% chance “any randomly selected pair of hedge funds will move up and down in tandem in a given month from 2006 to 2010.”

A probable reason: they are all buying the same stocks.

Complete article

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