RT Journal Article
SR Electronic
T1 Do Hedge Funds Belong in Taxable Portfolios?
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 58
OP 73
DO 10.3905/jwm.2001.320403
VO 4
IS 1
A1 R. McFall Lamm, Jr.
A1 Tanya E. Ghaleb-Harter
YR 2001
UL https://pm-research.com/content/4/1/58.abstract
AB The authors examine the suitability of hedge funds in taxable investment portfolios. They apply standard mean-variance analysis to taxable portfolios that include hedge funds as an asset class. They first review the performance characteristics of hedge fund portfolios and then describe the problems faced by taxable investors and the tax structures available for holding assets. Third, they specifically add hedge funds to portfolios of traditional assets. Lastly, the authors provide general guidelines on the appropriate allocation to hedge funds for taxable investors. They conclude that hedge funds significantly improve portfolio efficiency for taxable investors and find that sizeable allocations are appropriate, even for conservative portfolios, though they concede that their results also show that more aggressive taxable investors should commit much less to broad hedge fund portfolios than nontaxable investors.