The Effect of Voluntary Adviser Registration on Hedge Fund Performance

Abstract

We examine the value of hedge fund adviser registration, and its accompanying disclosure and regulatory provisions, to investors during times of financial crisis.  We compare the performance of two groups of hedge funds during the 2008 financial crisis; one group consists of funds with advisers registered with the SEC during the financial crisis, while the advisers of funds in the other group remained unregistered during the same period.  Comparing the compound holding- period returns from December 2007 through June 2009 and controlling for investment style, we find no significant difference between the mean returns of hedge funds that have registered advisers to the mean returns of the funds with unregistered advisers.