An Analysis of Hedge Fund Performances During Periods of Recession

Date of Award

Spring 5-2020

Document Type

Honors Thesis

Degree Name

Bachelor of Arts



Advisor/Committee Chair

Hany Shawky, Ph.D


Hedge funds are seen as an investment vehicle that advertises returns above and beyond the market, especially in poor economic times. In exchange for returns above and beyond passive strategies, hedge funds come with a large expense to investors; typically, “Two and Twenty”. This study used the TASS database to gather information about hedge funds monthly returns and compared these returns with the S&P 500 (S&P) for the same period. Six categories of hedge funds were chosen to be compared with the S&P for the period of 2007-2009; Long/Short Equity, Fund of Funds, Event Driven, Equity Market Neutral, Emerging Markets, and Convertible Arbitrage. During the period of 2007-2009, the average monthly return of five of the six strategies were above the S&P, which saw average monthly returns of -0.1636% for the same three-year period. When comparing the median return for each strategy, the monthly returns for all strategies outperformed the S&P. This research provides insight into the performance of the different categories of hedge funds during periods of recession, which could lead to better investment decisions depending on one’s opinion of where we are located in the business cycle.

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