Capacity Constraints and the Opening of New Hedge Funds
نویسندگان
چکیده
We test the hypothesis that capacity constraints significantly influence hedge fund families’ decision to open new funds. Hedge fund families face diseconomies of scale because of the non-scalability of their investment strategies. We propose that as the existing funds approach critical size, hedge fund families may prefer opening new funds rather than accepting new investment in the existing funds. Empirically we find that hedge fund families’ propensity to open new funds increases with their capacity constraints. Also, a new hedge fund opening is followed by a decrease in fund flows to, and a performance improvement of, the existing funds within the same fund family.
منابع مشابه
Can Capacity Constraint Explain Introduction of New Hedge Funds?
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