RT Journal Article SR Electronic T1 Are Venture Capital Firms and Hedge Funds Safer Than Mutual Funds? JF The Journal of Wealth Management FD Institutional Investor Journals SP 86 OP 95 DO 10.3905/jwm.2003.320484 VO 6 IS 2 A1 Robert Dubil A1 Maretno A Harjoto YR 2003 UL https://pm-research.com/content/6/2/86.abstract AB The authors observe that mutual funds compete in tournaments based on rank, with investors allocating new money only into top ones and ignoring the rest. They then suggest that losing managers play go-for-broke in order to place high in the contest. They note that, in contrast, venture capital firms and hedge funds compete based on risk-adjusted performance. Thus, they argue that investors' behavioral biases matter more in the alternative asset world. In particular, they feel that investors' loss aversion influences a fee-maximizing manager. It causes a losing manager to scale down risk and a winning one take some. They argue that this provides a risk-mitigating safety valve which is absent in the performance-obscuring tournament, suggesting that there may be more risk in that “tournament” mutual fund environment than in the alternative asset sphere.