The Emerging Hedge Fund Industry in China

There will be three dimensions in analyzing the hedge fund data.
First, we will conduct time series analysis on monthly performance and fund assets to document patterns of performance and the relation with fund characteristics. Also, the relation between this alternative investment class and the traditional asset classes will be examined.
Second, we will perform cross-sectional analysis on fund characteristics, especially the impact of ownership (bank, investment companies, or trust companies) on fund performance and risk. The comparison between China funds and international funds will also be conducted.
Third, we will develop a fund rating system, based on the risk and return estimates such as alpha, beta, VaR, expected short fall, tail risk, and other measures. This will be the first rating system for hedge funds in China.

This will be the first study to comprehensively evaluate hedge funds in China. The results from this study will help market participants including investors, fund managers, and regulators to better understand the industry and make sensible future decisions. Given that the industry has just started, it is timely and necessary to examine the issues related to return, risk, fees, strategies, and regulatory issues. The results from this study will have strong implications to the further development of the industry. The study will provide recommendations to investors for their investment decisions, to regulators for their policy making decisions, and to managers for their asset management decisions.