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Case
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Reference no. UVA-F-1337
Published by: Darden Business Publishing
Published in: 1998
Length: 11 pages
Data source: Field research

Abstract

Fred Bocock was examining the performance of the Energy Hedge Fund and the Energy Portfolio, a hedge fund and a mutual fund respectively, that he manages. Fred had become increasingly aware that absolute returns or relative returns (returns relative to a benchmark) may not adequately capture his performance and some measure of risk-adjusted performance was necessary. The Dynamis Energy Hedge Fund extends the discussion of performance evaluation to the hedge-fund arena. (See ''Zeus Asset Management'', UVA-F-1232, for an examination of performance evaluation techniques in the mutual funds arena.) More broadly, the case engages students in discussions on what hedge funds are, what investment strategies they use and who their investors are. Since the portfolio manager of Dynamis manages both an oil-sector equity mutual fund and an oil-sector hedge fund, the case allows for a comparison between a hedge fund and a mutual fund. Students should consider the pros and cons of evaluating the performance of the oil-stock mutual fund against a number of oil-sector stock indices as well as against a number of generic indices, such as the S&P 500. The use of futures, options, shorts and leverage by hedge funds makes it a lot more difficult to measure their performance. The case comes with a spreadsheet, which contains data on the energy mutual fund, the Dynamis hedge fund and several relevant indices.
Industry:
Other setting(s):
1998

About

Abstract

Fred Bocock was examining the performance of the Energy Hedge Fund and the Energy Portfolio, a hedge fund and a mutual fund respectively, that he manages. Fred had become increasingly aware that absolute returns or relative returns (returns relative to a benchmark) may not adequately capture his performance and some measure of risk-adjusted performance was necessary. The Dynamis Energy Hedge Fund extends the discussion of performance evaluation to the hedge-fund arena. (See ''Zeus Asset Management'', UVA-F-1232, for an examination of performance evaluation techniques in the mutual funds arena.) More broadly, the case engages students in discussions on what hedge funds are, what investment strategies they use and who their investors are. Since the portfolio manager of Dynamis manages both an oil-sector equity mutual fund and an oil-sector hedge fund, the case allows for a comparison between a hedge fund and a mutual fund. Students should consider the pros and cons of evaluating the performance of the oil-stock mutual fund against a number of oil-sector stock indices as well as against a number of generic indices, such as the S&P 500. The use of futures, options, shorts and leverage by hedge funds makes it a lot more difficult to measure their performance. The case comes with a spreadsheet, which contains data on the energy mutual fund, the Dynamis hedge fund and several relevant indices.

Settings

Industry:
Other setting(s):
1998

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