Research on the Performance of Hedge Funds with Different Strategies in the 2008 Financial Crisis

Research Article
Open access

Research on the Performance of Hedge Funds with Different Strategies in the 2008 Financial Crisis

Tian Xie 1*
  • 1 Wuhan University of Technology    
  • *corresponding author 1070378206@qq.com
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/24/20230439
AEMPS Vol.24
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-91-1
ISBN (Online): 978-1-915371-92-8

Abstract

The financial crisis of 2008 affected hedge funds of all types and with different strategies to varying degrees. In this article, I will examine the performance of five strategies during the crisis and the reasons for this. In 2008, managed futures strategies returned 19.31% because the futures market mainly deals with commodities, which are highly volatile and trendy, and managed futures strategies, which are mainly trend-based, are more likely to achieve excellent returns in this market. The macro strategy returned 3.34% because the strategy executors focused on the overall economic fundamentals and potential crises. Because the macro strategy has a global coverage of investments and multiple species, there are more options to hedge against risks when they arise. The long/short equity strategy returned -19.26%. The long/short equity strategy is predominantly long, with significant losses on long trades outweighing gains on short positions resulting in an overall negative return. The event-driven strategy returned -20.30%. Major corporate events often suffer from various resistance to proceed correctly in the case of a financial crisis. I hope my research will help investors allocate their investments appropriately according to the characteristics of different strategy funds.

Keywords:

hedge funds, 2008 financial crisis, returns, strategies

Xie,T. (2023). Research on the Performance of Hedge Funds with Different Strategies in the 2008 Financial Crisis. Advances in Economics, Management and Political Sciences,24,214-218.
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References

[1]. Acharya V V, Richardson M. Causes of the financial crisis[J]. Critical review, 2009, 21(2-3): 195-210.

[2]. Mohan R. Global financial crisis: Causes, impact, policy responses and lessons[J]. Reserve Bank of India Bulletin, 2009: 879-904.

[3]. Ben-David I, Franzoni F, Moussawi R. Hedge fund stock trading in the financial crisis of 2007–2009[J]. The Review of Financial Studies, 2012, 25(1): 1-54.

[4]. Shadab H B. Hedge funds and the financial crisis[J]. Mercatus on Policy, 2009 (24).

[5]. Strömqvist M. Hedge funds and financial crises[J]. Sveriges Riksbank economic review, 2009.

[6]. Schaub N, Schmid M. Hedge fund liquidity and performance: Evidence from the financial crisis[J]. Journal of Banking & Finance, 2013, 37(3): 671-692.

[7]. Sung S, Chun D, Cho H, et al. Hedge fund market runs during financial crises[J]. Economic Research-Ekonomska Istraživanja, 2021, 34(1): 266-291.

[8]. Asif R, Frömmel M, Mende A. The crisis alpha of managed futures: Myth or reality?[J]. International Review of Financial Analysis, 2022, 80: 102045.

[9]. Hau H, Lai S. The role of equity funds in the financial crisis propagation[J]. Review of Finance, 2017, 21(1): 77-108.

[10]. Mac an Bhaird C. Demand for debt and equity before and after the financial crisis[J]. Research in international Business and Finance, 2013, 28: 105-117.

Cite this article

Xie,T. (2023). Research on the Performance of Hedge Funds with Different Strategies in the 2008 Financial Crisis. Advances in Economics, Management and Political Sciences,24,214-218.

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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2023 International Conference on Management Research and Economic Development

ISBN：978-1-915371-91-1(Print) / 978-1-915371-92-8(Online)
Editor：Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.icmred.org/
Conference date: 28 April 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.24
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Acharya V V, Richardson M. Causes of the financial crisis[J]. Critical review, 2009, 21(2-3): 195-210.

[2]. Mohan R. Global financial crisis: Causes, impact, policy responses and lessons[J]. Reserve Bank of India Bulletin, 2009: 879-904.

[3]. Ben-David I, Franzoni F, Moussawi R. Hedge fund stock trading in the financial crisis of 2007–2009[J]. The Review of Financial Studies, 2012, 25(1): 1-54.

[4]. Shadab H B. Hedge funds and the financial crisis[J]. Mercatus on Policy, 2009 (24).

[5]. Strömqvist M. Hedge funds and financial crises[J]. Sveriges Riksbank economic review, 2009.

[6]. Schaub N, Schmid M. Hedge fund liquidity and performance: Evidence from the financial crisis[J]. Journal of Banking & Finance, 2013, 37(3): 671-692.

[7]. Sung S, Chun D, Cho H, et al. Hedge fund market runs during financial crises[J]. Economic Research-Ekonomska Istraživanja, 2021, 34(1): 266-291.

[8]. Asif R, Frömmel M, Mende A. The crisis alpha of managed futures: Myth or reality?[J]. International Review of Financial Analysis, 2022, 80: 102045.

[9]. Hau H, Lai S. The role of equity funds in the financial crisis propagation[J]. Review of Finance, 2017, 21(1): 77-108.

[10]. Mac an Bhaird C. Demand for debt and equity before and after the financial crisis[J]. Research in international Business and Finance, 2013, 28: 105-117.

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