How Do Hedge Funds Manage Portfolio Risk?

Portfolio Management, Risk Management

This video by Gavin Cassar and Joseph Gerako investigates the determinants and outcomes of methods that hedge funds use to manage portfolio risk.

The presenters through their reserach found that there is tererogeneity in the methods that hedge funds use to manage portfolio risk. The funds that used formal models of portfolio risk did relative better in the extreme financial conditions such as in months of 2008. They had lower exposure to systematic risk. The managers of these funds also had more accurate expectations about how their fund would perform during short term bear market of October 2008.