What is Hedge Fund Research Index? Investors want to know the performance of hedge funds to ensure that their investment strategies will generate a healthy return on investment (ROI). Therefore, an investment research organization, HFR Inc., maintains databases that track the performance of hedge funds across all regions and strategies. This post will provide an in-depth explanation of what their hedge fund research index means.
What is a Hedge Fund? Hedge funds confidentially centralize capital resources from multiple investors. They also allow professional fund managers to allocate them for maximized returns with effective risk management strategies. Hedge fund research services assist investors and hedge fund managers in generating alpha to secure an ROI higher than the documented benchmarks. Fund managers use borrowed money to leverage or trade unconventional asset classes to achieve above-benchmark returns. However, the applications of investment research services vary across all hedge funds. Moreover, proprietary hedge databases offered by Barclays and Eurekahedge often become crucial in performance tracking. Hedge confidentiality and privileged access result in limited fund performance data being available publicly. Nevertheless, advanced research methodologies that source data from top publications help you summarize the trends in hedge asset classes.
What is a Hedge Fund Research Index? HFR Inc., founded in 1992, is popular among professional hedge fund research services. This organization leads the research standards in the alternative investment industry. HFRI means hedge fund research index, and HFR Inc. maintains databases to help fund managers analyze hedge fund performance using this HFRI. Hedge fund research indices enable detailed fund classification activities. You can also use HFR databases to access complete historical performance charts. Fund managers can benefit from HFRI integrations in the following investment research services. 1. Relative performance tracking, 2. Benchmarking, 3. Peer analysis.
Types of Available Hedge Fund Research Indices 1. HFR’s synthetic fund of fund (FOF) indices can include the funds belonging to the HFRI 500 index. They represent the low, mid, or high volatility performances of each fund of funds, i.e., multi-manager investment funds.
Commented [SS1]: Funds of funds?
2. However, HFRI 500 indices include hedge funds that allow new investments and offer quarterly liquidity.
Commented [AP2R1]: Yes, revised plurals to singulars for consistency, and added "multi-manager investment funds" for explanation.