Hedge fund consultant PivotalPath has formed a new partnership with the Institute for Private Capital (IPC) which will provide academic researchers with a wealth of hedge fund industry information while still maintaining manager confidentiality.
Going forward, researchers will no longer be solely reliant on commercial databases, and this access to more comprehensive information furthers IPC’s mission to promote a deeper understanding of the role private capital plays in the global economy.
The hedge fund industry’s historic opacity has led to misunderstanding and misrepresentation in the public sphere. A recent working paper, titled “The Hedge Fund Industry is Bigger (and has Performed Better) Than You Think,” has found that incomplete data, which is traditionally referenced in media coverage and industry-related studies, is a major contributor to the perception that the industry is smaller (by 40 per cent) and lower performing (by 18 per cent over a four-year period) than many think. Given the relatively few large, “institutional quality” hedge funds that show up in commercial databases, IPC was forced to rethink how empirical researchers should approach statistical analysis of the industry. Enter PivotalPath.
“PivotalPath’s comprehensive information and proprietary research contextualises performance across funds. Analysis of these richer and more granular characteristics are sure to lead to new insights for both academics and investors,” says Greg Brown, Distinguished Professor of Finance at UNC Kenan-Flagler Business School and founder of its Institute for Private Capital.
As part of a hedge fund universe-mapping initiative, IPC initially focused on the activist space as a test case for PivotalPath’s data. Tabulating fund-level gross asset values from Form-ADVs, IPC found that PivotalPath covers more than 90 per cent of GAV compared to just 35 per cent for commercial databases. Funds covered by PivotalPath also exhibit better performance across the board, from higher returns and greater alphas to lower betas.
“We are honoured to partner with IPC. Together, we seek to ensure hedge funds are viewed through an accurate lens. For too long, hedge funds have been misunderstood, when in fact performance across this USD5.2 trillion industry has been far better than conventional wisdom suggests,” says Jon Caplis, founder and CEO of PivotalPath. “In order to provide our clients with context-driven insights, we work tirelessly to structure meaningful data – undeniably the basis for any informative analysis. In the same way we provide insights to our allocator clients, we look forward to enabling top academic researchers, which could have meaningful implications across asset allocation decisions for trillions of dollars in institutional capital.”
PivotalPath conducts a monthly analysis of hedge fund performance and issues regular research on topics and trends that drive industry coverage.
