Olga Obizhaeva, Stockholm School of Economics
Olga Obizhaeva, Stockholm School of Economics, will present her paper “Fundraising in the Hedge Fund Industry”
Abstract: This paper studies the fundraising process in the hedge fund industry. Using the SEC Form D filings, I document that hedge funds sold to investors directly outperform those offered to investors by brokers by 2% (1.6%) per year on a risk-adjusted basis before (after) fees. Directly sold funds also have a larger investment size and charge higher fees compared to broker sold funds. These results are consistent with a separating equilibrium in a stylized model of fundraising where funds optimally choose fees and capital raising channels, whereas investors endogenously allocate capital across funds.