FIN 260 Lecture Notes - Lecture 8: Mutual Fund
Document Summary
Originally set up to be funds that hedged an investor"s exposure. Now can take on much greater risk than a typically mutual fund. Vast majority of hedge funds underperform the sp500 index. Charge huge fees that drive down their performance. Q: how are stocks traded: buttonwood tree, trading floor, specialists (market makers, technology now drives all trading. Q: how is the average stock held by the investor: (cid:883)99(cid:882)"s average was 4 years, now 3 months, plot pg. 33(cid:882) of nate silver"s book: buy & hold is not done as much as it was in the past. Increasingly people hold only index funds: they don"t really care about underlying firms in the index, so investors don"t police the firms well. The investors don"t really act as owners of the firm: causes firm to do things not in the interest of the investors, derivatives:
