Philosophy Psychological Egoism vs. Ethical Egoism Essay

Philosophy Psychological Egoism vs. Ethical Egoism - Essay Example Ethical egoism has a normative ethical theory which helps us to determine between the right and wrong of things or actions. In fact, it guides us as to how we are supposed to act in different situations. In contrast to Ethical Egoism, we have Psychological egoism that is based on the descriptive theory which means that it describes certain salient facts about human psychology. According to Ethical egoism, we help others with the notion that it works to the person’s own benefit and advantage and in the course of it, justify our actions. In Ethical egoism it is often debated that sometimes the help that is rendered does more harm than good, and since harming others is wrong, therefore we should not help others. Others have argued that we do not understand the needs of others and hence end up intruding upon their privacy and dignity which might be offensive to them and hence helping them is not necessary. According to the principles of egoism, condemning a certain action would oc cur if it did not work out in one’s own self interest and condemning any action on the basis of harming others would not be the case unless the action harmed one’s own self. According to the ethics of Altruism, the life of an individual is not given too much importance because according to altruistic principles, an individual should be ready to lay down his life (sacrifice) for the good of others. On the contrary, Ethical egoism permits an individual to view their life as having an ultimate value. In weighing the pros and cons between the two, ethical egoism is more acceptable. However, besides the two there is another option where we are in a position to balance our own interests with the interests of other individuals in our society. Egoism offers us a rationale when looking at it from a common sense moral perspective. On moral grounds not harming others, not lying and keeping to our

An Effective Counsellor Essay Example for Free

An Effective Counsellor Essay Counsellors should continually assess their own feelings and needs to maintain an appropriate relationship with the client. There are issues that a counsellor should be aware of when doing a self-assessment; The counsellor should be aware of when they feel uncomfortable with a client or a topic being discussed. The counsellor must choose to either be honest with the discomfort of a situation or topic, or they may refer the client to another counsellor. The counsellor should be aware of their own avoidance strategies. The counsellor must be able to recognize when they avoid certain topics, or allow distractions and then find an effective way to facilitate help appropriately. The counsellor should be able to recognize when they are trying to control a situation. It is important that the counsellor engage in responsive listening so that theyre not controlling the communication process. The counsellor must remind themselves continuously that any issue being discussed has many perspectives and that theirs may be different, from that of the clients. It is important not to express whether the clients view is right or wrong. The counsellor must avoid being omnipotent. It is not the counsellors job to make the client better. It is the counsellors job to help facilitate the client in addressing and resolving the issues. It is also important that the counsellor identifies and responds to positive feelings, and that they dont just focus on negative ones. This provides balance for the client and allows them to amplify positive strengths in their lives. Lastly, the counsellor must keep in mind to never ask a question, or discuss a 1 topic that you would not be able to discuss in a similar situation. These issues should always be addressed when a Counsellor is engaging in a self-assessment. By completing a self-assessment I was able to address my values, skills, attributes and my interests. I identified that while I am not a judgemental person, I do hold values that if not addressed prior to a situation could cause myself to become close-minded and that would ultimately put a barrier up in my ability to help the client. I also was able to identify how I can use my skills and attributes to counsel my clients in a positive manner. I have identified that I try to find a positive in all situations but I dont ever be-little the seriousness of the topic at hand. With a self-assessment I am able to recognize when and how to communicate appropriately with a client. The individuals I support will be able to discuss issues with me and feel comfortable knowing that I dont judge or assume things about them. Both my verbal and non-verbal skills will make this evident to the client. As a registered Developmental Service Worker I could be taking on a role as a counsellor where self-assessment is crucial as it is important to be able to identify when or if I am not dealing with a situation or topic appropriately. I will use the skill of self-assessment in any other role whether that be taking on a position as a Personal Support Worker or working in a group home. It is important that I am able to identify my strengths and weaknesses when it comes to helping a client and that I am able to do so in a way that is prudent. It is also important to continually perform a self-assessment as situations change or evolve. A counsellor who understands how they communicate and who has self-awareness is likely to be more effective in helping the client, then those who are not aware of these issues. Counsellors who are able to identify aspects such as if a topic being discussed makes them feel uncomfortable, if the topic goes against their own values or beliefs, if it is causing different emotions in themselves and why that may be, if they are projecting these feelings and whether or not they are really listening to the 2 client. Continual self-awareness is crucial to the development of the counsellor and their ability to help the client.

Performance of Hedge Fund Relatively in UK

Performance of Hedge Fund Relatively in UK 1.1- Introduction: Hedge funds are actively managed portfolios that hold positions in publicly traded securities. Gaurav S. Amin and Harry M. Kat (2000) stated on their report that A hedge fund is typically defined as a pooled investment vehicle that is privately organized, administrated by professional investment managers, and not widely available to the public. It charges both a performance fee and a management fee. It allows a flexible investment for a small number of large investors (usually the minimum investment is $1 million) can use high risk techniques. 1Now days it is very clear that in the matter of alternative investment mutual fund is not performing well. As a high absolute returns and typically have features such as hurdle rates and incentive fees with high watermark provision hedge fund gives a better align to the interests of managers and investors. 2Moreover mutual funds typically use a long-only buy-and-hold type strategy on standard asset classes, which help to capture risk premia as sociate with equity risk, interest rate risk, default risk etc. However, they are not very helpful in capturing risk premia associate with dynamic trading strategies. That is why hedge fund comes into the picture. In the year of 2009, this takes the greatest history of the world in the following century. In the year of 2008 the world saw the greatest fall down of the world economy. Lots of people missing their jobs, lots of company were stopped. The world economy faced the highest losses in the history. These all factors are showing only one way to makeover from that greatest downfall that is hedging. 3The last couple of decades have witnessed a rapidly growing in the hedge funds. Relative to traditional investment portfolios hedge funds exhibit some unique characteristics; they are flexible with respect to the types of securities they hold and the type of the position they take. 1 Agarwal, V. and Naik, N. (2000). Multi-period performance persistence analysis of hedge fund s. The journal of financial and quantitative analysis. Vol. 35, No,3. PP-327. 2 Agarwal, V. and Naik, N. (2004). Risks and portfolio decisions involving hedge funds. The review of financial studies, Vol. 17, No.1. PP-64. 3 Journal of banking and finance 32(2008) 741-753- Hedge Fund Pricing and Model Uncertainty by Spyridan D. Vrontos, Ioannis D. Vrontos, Daniel Giomouridies. Since the early 1990s, hedge funds have become an increasingly popular asset class. The amount invested globally in hedge funds rose from approximately $50 billion in 1990 to approximately $1 trillion by the end of 2004. And because these funds characteristically use stantial leverage, they play a far more important role in the global securities markets than the size of their net assets indicates. Moreover, investments in hedge funds have become an important part of the asset mix of institutions and ever wealthy individual investors (Malkiel, B. and Saha, A. (2005). 4The number of FOHFs increase by 40% between 2001 and 2003, and now comprised almost two third of the $650 billion invested in the USAs hedge fund market. Due to its nature it is difficult to estimate the current size of hedge fund industry. 5Van Hedge Fund Advisors estimates that by the end of 1998 there were 5380 hedge fund managing $311 in capital, with between $800 billion and $1 trillion in total assets, which indicates the higher number of recent new entries. So far, hedge fund is based on American phenomena. About 90% hedge fund managers are based in the US, 9% in Europe and 1% in Asia and elsewhere. Now a days around 5883 hedge funds are trading around the world. (*Barclay Hedge database). Chart 1: Assets of Hedge fund industry from 1997 to 2009. Source: http://www.barclayhedge.com/research/indices/ghs/mum/Hedge_Fund.html According to the Barclay hedge database the asset of hedge fund industry is $1205.6 billion dollar. 4 Financial times, 29th October, 2003. www.vanhedge.com http://www.barclayhedge.com/products/hedge-fund-directory.html 1.2- Research questions: Specifically in this paper, I want to address two main questions. First one is what is the performance of hedge fund and FTSE100 over the period of 2001 to 2008? To evaluate the performance I use three traditional risk adjusted performance measurement model. To give a better idea and matter of easily understand I use the Sharp ratio, the Treynor ratio, and the Capital Asset Pricing Model (CAPM). However, the equity market index is not necessarily the right benchmark for hedge funds, therefore, market betas and abnormal returns may not be the appropriate measures for risks and profits. To mitigate this problem, I calculate sharp ratios, which are defined as the ratio of the average excess fund returns over the standard deviation. Second question is does hedge funds gives better return from UK equity market (FTSE100)? To make this comparison I use regression analysis where the correlation will show how the hedge funds act against the FTSE 100. 1.3- Objective of the study: The main objective of this study is to find out the performance of Hedge fund relatively with the UK equity market FTSE 100. In addition, I address in this paper four major hedge funds performance correlation with FTSE100. As a result an individual investor can easily understand which portfolio will give better return at their investment perspective. This study focuses on UK investors perspective only. In the past several years, lots of studies had been done on this area like Park and Staum (1998), Brown et al. (1999), Agarwal and Naik (2000), Herzberg and Mozes (2003), Capocci and Hubner (2004), and Malkiel and Saha (2005) analysis the hedge fund performance. Most of the statistical methodology is on the regression with equity markets and rest of all are in the cross product ratio. Above all they tried to find out the return of different types of hedge fund depending on the market risk and market return. So finally, the purpose of this paper is clearly established, that is to understand hedge fund performance over the UK equity market (FTSE100). 1.5- Overview of the methodology: In this section I would like to describe an overview of my methodology. To find out the hedge fund performance and the FTSE100 markets performance I use three traditional risk-adjusted performance measurement models. First one is the Sharpe ratio, secondly, the Treynor ratio and finally, the Capital Asset Pricing Model (CAPM). I address the Sharpe ratio and the Treynor ratio because these two gives better easy view for an investor to evaluate the hedge fund performance by themselves. However, the Sharpe ratio and the Treyneo ratio measure the excess return of per unit of risk for an investment asset. These two are used to understand how well the return of an asset compensates the investor for the risk taken. When comparing two assets each with the expected return of fund against the same benchmark with risk free return, the asset with the higher Sharpe ratio gives more return for the same risk. As a result investor can easily understand where to invest. In this paper I use total 287 funds including different types of hedge funds like- Event driven (31), Hedge fund (54), Global macro (37) and Market neutral (165). As a benchmark I use FTSE100 and for the risk free rate I use UK 10 year Treasury bond. All data were collected from the DataStream which is run by Thomson Reuters the worlds leading source of intelligent information for businesses and professionals (http://thomsonreuters.com/). 1.6- Definition of the key terms: Hedge fund: In the early study by Francis C.C. Koh, Winston T.H. Koh , David K.C. Lee, Kok Fai Phoon (2004) stated in their report that Hedge Funds are innovative investment structures that were first created more than 50 years ago by Alfred Winslow Jones. He established a fund with the following features: (a) He set up hedges by investing in securities that he determined as undervalued and funding these positions partly by taking short positions in overvalued securities, creating a market neutral position; (b) He also designed an incentive fee compensation arrangement in which he was paid a percentage of the profits realized from his clients assets; and (c) He invested his own investment capital in the fund, ensuring that his incentives and those of his investors were aligned and forming an investment partnership. Most modern hedge funds possess the above listed features, and are set up as limited partnerships with a lucrative incentive-fee structure. In most hedge funds, managers also often have a significant portion of their own capital invested in the partnerships. The term hedge fund has been generalized to describe investment strategies that range from the original market-neutral style of Jones to many other strategies and opportunistic situations, including global/macro investing. On the other report by Liang, B. (1999) stated on his report that there are two major types of hedge funds, one is inshore and another is offshore. Onshore funds are limited partnerships of no more than 500 investors. Offshore funds are limited liability corporations or partnerships established in the tax neutral jurisdictions that allow investors an opportunity to invest outside their own country and minimize their tax liabilities. Due to the large variety of hedge fund investing strategies, there is no standard method to classify hedge funds smartly. There are at least 8 major databases set up by data vendors and fund advisors. I follow the classification used by Eichengreen and Mathieson (1998), which relied on the MAR/Hedge database. Under this classification, there are 8 categories of hedge funds with 7 differentiated styles and a fund-of-funds category. For my paper I chose three different categories, which are as follows: (a) Event driven funds. These are funds that take positions on corporate events, such as taking an arbitraged position when companies are undergoing re-structuring or mergers. For example, hedge funds would purchase bank debt or high yield corporate bonds of companies undergoing re-organization (often referred to as distressed securities). Another event-driven strategy is merger arbitrage. These funds seize the opportunity to invest just after a takeover has been announced. They purchase the shares of the target companies and short the shares of the acquiring companies. (c) Global/Macro funds refer to funds that rely on macroeconomic analysis to take bets on major risk factors, such as currencies, interest rates, stock indices and commodities. Opportunistic trading manager that makes profits from changes in global economies typically based in major interest rate shifts. To make profits managers uses leverage and derivatives. (d) Market neutral funds refer to funds that bet on relative price movements utilizing strategies such as long-short equity, stock index arbitrage, convertible bond arbitrage and fixed income arbitrage. Long-short equity funds use the strategy of Jones by taking long positions in selective stocks and going short on other stocks to limit their exposure to the stock market. Stock index arbitrage funds trade on the spread between index futures contracts and the underlying basket of equities. Convertible bond arbitrage funds typically capitalize on the embedded option in these bonds by purchasing them and shorting the equities. Fixed income arbitrage bet on the convergence of prices of bonds from the same issuer but with different maturities over time. This is the second largest grouping of hedge funds after the Global category. Source Eichengreen and Mathieson (1998). 2.1.2- Current scenario of hedge funds: Chapter two Literature review: 2.1- History of hedge fund Despite the increasing interest and recent development, few studies have been carried out on hedge funds comparing to other investment tools like mutual funds. An analysis of Hedge Fund performance 1984-2000 by Capocci Daniel using one of the greatest hedge fund database ever used on his working paper (2796 individual funds including 801 dissolved), to investigate hedge funds performance using various asset-pricing models, including an extension from of Carharts (1997) model combined with Fama and French (1998), Agarwal and Naik (2000) models that take into account the fact that some hedge funds invest in emerging market bond. At the end they found that their model does a better job describing hedge funds behaviour. That appears particularly good for the Event Driven, Global Macro, US Opportunistic, Equity non-Hedge and Sector funds. Since the early 1990s, when around 2000 hedge funds were managing assets totalling capital of $60 billion, the subsequent growth in the number and asset base of hedge funds has never really been refuted. The industry only suffered from a relative slowdown in 1998, but since then has enjoyed a renewed vitality with an estimated total of 10,000funds managing more than a trillion US dollars by the end of 2006. The growing trend of the sector remained remarkably sustained during the stock market collapse that started in March 2000, when the NASDAQ composite Index reached an all-time high of 5,132 and finished three years later with a floor level of 1,253. In the meantime, the global met asset value (NAV) of hedge funds continued to grow at a steady rate of 10.6% (Van Hedge Funds Advisors International, 2002), contrasting with a decrease of 2.7% in the worldwide mutual fund industry ( Investment Company Institute, 2003). In 2001, Capocci and Hubner(2004) estimated that there were 6,000 he dge fund managing around $400 billion. In 2007, Capocci, Duquenne and Hubner (2007) estimated that there were 10,000 hedge funds managing around $1 trillion. This is a growth of 11% in the number of funds and 26% in assets over six years (6PhD thesis paper by Daniel P.J. Capocci). Other studies from practitioners Hennessee (1994), and Oberuc (1994) also showed an evidence of superior performance in the case of hedge funds. Ackernann and Al. (1999) and Liang (1999) who compared the performance of hedge funds to mutual funds and several indices, found that hedge funds constantly obtained better performance than mutual funds. Their performance was not better than the performance of the market indices considered. They also indicated that the returns in hedge funds were more unstable than both the returns of mutual funds and those of market indices. According to Brown and Al. (1997) hedge funds showing good performance in the first part of the year reduce the volatility of their portfolio in the second half of the year (Capocci Daniel- An analysis of hedge fund performance 1984-2000). Taking all these results into account hedge funds seems a good investment tool. 6 PhD thesis paper by Daniel P.J. Capocci. Electronic copy available at: http//ssrn.com/abstract=1008319. 2.1.1- Facts and finding of development in hedge funds: As a result of flexible investment strategies, a better manager inventive alignment, sophisticated investors, and limited SEC regulations hedge funds have gained incredible popularity. In the report of Agarwal, V. and Naik, N. (2004) stated that it is well accepted that the world of financial securities is a multifactor world consisting of different risk factors, each associated with its own factor risk premium, and that no single investment strategy can span the entire risk factor space. Therefore investors wishing to earn risk premia associated with different risk factors need to employ different kinds of investment strategies. Sophisticated investors, like endowments and pension funds, seem to have recognized this fact as their portfolios consist of mutual funds as well as hedge funds.1 Mutual funds typically employ a long-only buy-and-hold-type strategy on standard asset classes, and help capture risk premia associated with equity risk, interest rate risk, default risk, etc. Howe ver, they are not very helpful in capturing risk premia associated with dynamic trading strategies or spread-based strategies. This is where hedge funds come into the picture. Unlike mutual funds, hedge funds are not evaluated against a passive benchmark and therefore can follow more dynamic trading strategies. Moreover, they can take long as well as short positions in securities, and therefore can bet on capitalization spreads or value-growth spreads. As a result, hedge funds can offer exposure to risk factors that traditional long-only strategies cannot. However, investor can create exposure like hedge funds by trading on their own account, in practice they encounter many frictions due to incompleteness of markets like the publicly traded derivatives market and the financing market. Moreover, the derivatives market for standardized contracts has grown a great deal in recent years, still it is very costly for an investor to create a customized payoff on individual securities. The same is true for the financing market as well, where investors encounter difficulties shorting securities and obtaining leverage. These frictions make it difficult for investors to create hedge fund-like payoffs by trading on their own accounts. According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) in 1990, the entire hedge fund industry was estimated at about US$20 billion. At of 2004, there are close to 7000 hedge funds worldwide, managing more than US$830 billion. Additionally, about US$200-300 billion is estimated to be in privately managed accounts. While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of hedge funds and other hedge fund-linked products are increasingly being marketed to the retail market. While hedge funds are well established in the United States and Europe, they have only begun to grow aggressively in Asia. According to Asia Hedge magazine, there are more than 300 hedge funds operating in Asia (including those in Japan and Australia), of which 30 were established in year 2000 and 20 in 2001. In 2003, 90 new hedge funds were started in Asia, compared with 66 in 2002, according to an estimate by th e Bank of Bermuda. In 2004 more than US$15 billion, hedge fund investments in Asia are expected to grow rapidly. Several factors support this view. Asian hedge funds currently account for a tiny slice of the global hedge fund pie and a mere trickle of the total financial wealth of high net worth individuals in Asia. Hedge funds have posted attractive returns. From 1987 to 2001, the Hennessee Hedge Fund Index posted annualised returns of 18%, higher than the SPs 13.5%. Hedge funds are seen as a natural hedge for controlling downside risk because they employ exotic investment strategies believed to generate returns that are uncorrelated to traditional asset classes. Hedge funds vary in their strategies. So-called macro funds, such as Quantum Fund, generally take a directional view by betting on a particular bond market, say, or a currency movement. Other funds specialize in corporate events, such as mergers or bankruptcies, or simply look for pricing anomalies the stock markets. Hedge funds vary widely in both their investment strategies and the amount of financial leverage. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) There are a number of factors behind the meteoric rise in demand for hedge funds. The unprecedented bull-run in the US equity markets during the 1990s expanded investment portfolios. This led an increased awareness on the need for diversification. The bursting of the technology and Internet bubbles, the string of corporate scandals that hit corporate America and the uncertainties in the US economy have led to a general decline in stock markets worldwide. This in turn provided fresh impetus for hedge funds as investors searched for absolute returns. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Unlike registered investment companies, hedge funds are not required to publicly disclose performance and holdings information that might be construed as solicitation materials. Since the early 1990s, there has been a growing interest in the use of hedge funds amongst both institutional and high net worth individuals. Due to their private nature, it is difficult to obtain adequate information about the operations of individual hedge funds and reliable summary statistics about the industry as a whole. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Hedge funds are known to be growing in size and diversity. As at the end of 1997, the MAR/Hedge database recorded more than 700 hedge fund managing assets of US$90 billion. This is only a partial picture of the industry, as many funds are not listed with MAR/Hedge. In practical terms, it is not easy to estimate the current size of the hedge fund industry unless all funds are regulated or obligated to register their operations with a common authority. Brooks and Kat (2001) estimated that, as at April 2001, there are around 6000 hedge funds with an estimated US $400 billion in capital under management and US $1 trillion in total assets. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) three interesting features differentiate hedge funds from other forms of managed funds. Most hedge funds are small and organized around a few experienced investment professionals. In fact, more than half of U.S Hedge Funds manage amounts of less than US$25 million. Further, most hedge funds are leveraged. It is estimated that 70 per cent of hedge funds use leverage and about 18% borrowed more than one dollar for every dollar of capital. (See Eichengreen and Mathieson (1998). Another peculiar feature is the short life span of hedge funds. Hedge funds have an average life span of about 3.5 years (See Stefano Lavinio (2000) pp 128). Very few have a track record of more than 10 years. These features lead many to view hedge funds, as risky and opportunistic. In the early study by Fung and Hsieh (2001), they use option like payoffs to view the risks of trend following hedge funds. They saw that the trend followers are typically commodity trading advisors (CTAs) who attempt to profit from trends in commodity prices using technical indicators. According to Fung and Hsieh (2001) trend followers are particularly interesting in that not only are their returns uncorrelated with the standard equity, bond, currency, and commodity indices, but their returns tend to exhibit option like features. They tend to be large and positive during the best and worst performing months of world equity indices. They cite evidence by Fung and Hsieh (1997) who show that if one divided up the states of the world into five states based on the return on the MSCI equity world index, trend followers tend to outperform when the MSCI equity return is at its lowest and highest. The relationship between trend followers and the equity market is non-linear and U-shaped. Alth ough returns of trend following funds have a low beta against equities on average, the state-dependent betas tend to be positive in up-markets and negative in down markets. As a result, Fung and Hsieh (2001) assume that the simplest trend following strategy has the same payout as a structured option known as the look back straddle. The owner of a look back call option has the right to buy the underlying asset at the lowest price over the life of the option. Similarly, a look back put option allows the owner to sell at the highest price. The combination of these two options is the look back straddle, which delivers the ex-post maximum payout of any trend following strategy. Fung and Hsieh (2001) then demonstrate empirically that look back straddle returns resemble the returns of trend following hedge funds. Building on this pioneer work, Fung and Hsieh (2004) propose seven factors that explain aggregate hedge fund returns. These seven factors include the excess return on the SP 500 index, the Wilshire small cap minus large cap index return, the term spread, the credit spread, and trend following factors for bonds, currencies, and commodities. They show that their seven factor model well explains variation in aggregate hedge fund returns. In addition, they find that equity long/short hedge funds tend to load positively on the SP 500 index factor and the small cap minus large cap factor. These results are consistent with the observation that equity long/short hedge funds typically have a small positive exposure to stocks and tend to be long small stocks and short large stocks. Fung and Hsieh (2004) also find that fixed income funds on the other hand tend to load negatively on the change in the credit spread, where the credit spread is measured as the difference between the yield on Moodys Baa bonds and the yield on the 10-year constant maturity Treasury bond. The reason is that fixed income funds typically buy bonds with lower credit ratings and/or less liquidity and then hedge the interest rate risk by shorting US Treasury bonds, which have the highest credit rating and are more liquid. However, Agarwal and Naik (2004) also propose a multi-factor model to explain hedge fund risks. They find that non-linear option like payoffs are not restricted to trend followers and risk arbitrageurs, but are an integral feature of payoffs for a wide range of hedge fund strategies. In particular they observe that the payoffs on a large number of hedge fund strategies look like those from writing a put option on the equity index. These strategies include risk arbitrage, distressed debt, convertible arbitrage, and relative value arbitrage. Consistent with the exposure of these strategies to the risks borne by sellers of equity index put options, Agarwal and Naik (2004) find that these hedge funds suffer from significant left tail risk which tends to coincide with severe market downturns. The performance of hedge fund in 2008 was very shocking like more than ten years ago. Teo, M (2009) stated that in the month of August 1998 alone LTCM lost 45% of its capital in the wake of the massive liquidity event triggered by the Russian rubble default. Lots of academic literature has shown that the year 2007 and 2008 was the worst performance of hedge fund. As we know that hedge fund managers make portfolio by taking position in equity market and another fund, but unfortunately the world equity market goes downside. As a result investors who wish to weather future financial maelstroms should take note of the non-linear relationship between hedge fund returns and the equity market. 2.3- Limitations (previous) With respect to lightly regulated investment vehicles with great treading flexibility, hedge funds often pursue highly sophisticated investment strategies. Hedge funds promise absolute returns to their investor leading to a belief that they hold factor-neutral portfolios. With this in mind, hedge funds have some limitations. In the early studies many researchers discussed and explain that obstacles. First of all if we consider the measurement model of hedge funds performance, most of the researcher use traditional performance measure model like, Sharpe ratio, Treynor ratio and Jensen alpha which are not adequate for the performance evaluation of hedge funds. Fung and Hsieh (2000) and Roy (2003) stated that is incorrect to use these performance measures t evaluate the hedge funds strategies. Brooks and Kat (2002), Kat (2003), Mahdavi (2004) and Murguia and Umemoto (2004) also mentioned that the Sharpe ratio does not represent the true performance of hedge funds because it does not take into consideration the asymmetry returns of these funds. As a result Perello (2007) propose to use the downside risk framework like Sortino ratio, the upside potential ratio and Omega measure as alternative performance measure. Moreover, Chung, Rosenberg and Tomeo (2004) and Scherer (2004) showed that Sortino ratio makes it possible to the investors to evaluate the risk and the performance of the h edge funds more sustainably than Sharpe ratio. Secondly, according to Ackermann et al. (1999) and to Fung and Hsieh (2000), two upward biases exist in the case of hedge funds. They do not exist in the case of mutual funds, and they both have an opposite impact to the survivorship bias. Survivorship bias is an important issue in hedge funds performance studies (see Carhart and al. 2000). This bias is present when a database contains only funds that have data for the whole period studies. In this case, there is a risk of overestimating the mean performance because the funds that would have ceased to exist because of their bad performance would not be taken into account. The two upward biases exist because, since hedge funds are not allowed to advertise, they consider inclusion in a database primarily as a marketing tool. The first phenomenon stressed by Ackermann and al. (1999) and called the self-selection bias is present because funds that realize good performance have less incentive to report their performance to data providers in order to attract new investors. Malkiel, B. and Saha, A. (2005) stated in their report that Databases available at any point in time tend to reflect the returns earned by currently existing hedge funds but they do not include the returns from hedge funds that existed at some time in the past but are presently not in existence (i.e., the truly dead funds) or exist but no longer report their results (the defunct funds). Unsuccessful hedge funds have difficulties obtaining new assets. Hence, they tend to close, leaving only the more successful funds in the database. But some funds stop reporting not because they are unsuccessful but because they do not want to attract new investment. The second point called instant history bias or backfilled bias (Fung and Hsieh 2000) occurs because after inclusion a funds performance history is backfilled. This may cause an upward bias because funds with less satisfactory performance history are less likely to apply for inclusion than funds with good performance history (Capocci Daniel 2001, An analysis of hedge fund performance 1984- 2000). Performance of Hedge Fund Relatively in UK Performance of Hedge Fund Relatively in UK 1.1- Introduction: Hedge funds are actively managed portfolios that hold positions in publicly traded securities. Gaurav S. Amin and Harry M. Kat (2000) stated on their report that A hedge fund is typically defined as a pooled investment vehicle that is privately organized, administrated by professional investment managers, and not widely available to the public. It charges both a performance fee and a management fee. It allows a flexible investment for a small number of large investors (usually the minimum investment is $1 million) can use high risk techniques. 1Now days it is very clear that in the matter of alternative investment mutual fund is not performing well. As a high absolute returns and typically have features such as hurdle rates and incentive fees with high watermark provision hedge fund gives a better align to the interests of managers and investors. 2Moreover mutual funds typically use a long-only buy-and-hold type strategy on standard asset classes, which help to capture risk premia as sociate with equity risk, interest rate risk, default risk etc. However, they are not very helpful in capturing risk premia associate with dynamic trading strategies. That is why hedge fund comes into the picture. In the year of 2009, this takes the greatest history of the world in the following century. In the year of 2008 the world saw the greatest fall down of the world economy. Lots of people missing their jobs, lots of company were stopped. The world economy faced the highest losses in the history. These all factors are showing only one way to makeover from that greatest downfall that is hedging. 3The last couple of decades have witnessed a rapidly growing in the hedge funds. Relative to traditional investment portfolios hedge funds exhibit some unique characteristics; they are flexible with respect to the types of securities they hold and the type of the position they take. 1 Agarwal, V. and Naik, N. (2000). Multi-period performance persistence analysis of hedge fund s. The journal of financial and quantitative analysis. Vol. 35, No,3. PP-327. 2 Agarwal, V. and Naik, N. (2004). Risks and portfolio decisions involving hedge funds. The review of financial studies, Vol. 17, No.1. PP-64. 3 Journal of banking and finance 32(2008) 741-753- Hedge Fund Pricing and Model Uncertainty by Spyridan D. Vrontos, Ioannis D. Vrontos, Daniel Giomouridies. Since the early 1990s, hedge funds have become an increasingly popular asset class. The amount invested globally in hedge funds rose from approximately $50 billion in 1990 to approximately $1 trillion by the end of 2004. And because these funds characteristically use stantial leverage, they play a far more important role in the global securities markets than the size of their net assets indicates. Moreover, investments in hedge funds have become an important part of the asset mix of institutions and ever wealthy individual investors (Malkiel, B. and Saha, A. (2005). 4The number of FOHFs increase by 40% between 2001 and 2003, and now comprised almost two third of the $650 billion invested in the USAs hedge fund market. Due to its nature it is difficult to estimate the current size of hedge fund industry. 5Van Hedge Fund Advisors estimates that by the end of 1998 there were 5380 hedge fund managing $311 in capital, with between $800 billion and $1 trillion in total assets, which indicates the higher number of recent new entries. So far, hedge fund is based on American phenomena. About 90% hedge fund managers are based in the US, 9% in Europe and 1% in Asia and elsewhere. Now a days around 5883 hedge funds are trading around the world. (*Barclay Hedge database). Chart 1: Assets of Hedge fund industry from 1997 to 2009. Source: http://www.barclayhedge.com/research/indices/ghs/mum/Hedge_Fund.html According to the Barclay hedge database the asset of hedge fund industry is $1205.6 billion dollar. 4 Financial times, 29th October, 2003. www.vanhedge.com http://www.barclayhedge.com/products/hedge-fund-directory.html 1.2- Research questions: Specifically in this paper, I want to address two main questions. First one is what is the performance of hedge fund and FTSE100 over the period of 2001 to 2008? To evaluate the performance I use three traditional risk adjusted performance measurement model. To give a better idea and matter of easily understand I use the Sharp ratio, the Treynor ratio, and the Capital Asset Pricing Model (CAPM). However, the equity market index is not necessarily the right benchmark for hedge funds, therefore, market betas and abnormal returns may not be the appropriate measures for risks and profits. To mitigate this problem, I calculate sharp ratios, which are defined as the ratio of the average excess fund returns over the standard deviation. Second question is does hedge funds gives better return from UK equity market (FTSE100)? To make this comparison I use regression analysis where the correlation will show how the hedge funds act against the FTSE 100. 1.3- Objective of the study: The main objective of this study is to find out the performance of Hedge fund relatively with the UK equity market FTSE 100. In addition, I address in this paper four major hedge funds performance correlation with FTSE100. As a result an individual investor can easily understand which portfolio will give better return at their investment perspective. This study focuses on UK investors perspective only. In the past several years, lots of studies had been done on this area like Park and Staum (1998), Brown et al. (1999), Agarwal and Naik (2000), Herzberg and Mozes (2003), Capocci and Hubner (2004), and Malkiel and Saha (2005) analysis the hedge fund performance. Most of the statistical methodology is on the regression with equity markets and rest of all are in the cross product ratio. Above all they tried to find out the return of different types of hedge fund depending on the market risk and market return. So finally, the purpose of this paper is clearly established, that is to understand hedge fund performance over the UK equity market (FTSE100). 1.5- Overview of the methodology: In this section I would like to describe an overview of my methodology. To find out the hedge fund performance and the FTSE100 markets performance I use three traditional risk-adjusted performance measurement models. First one is the Sharpe ratio, secondly, the Treynor ratio and finally, the Capital Asset Pricing Model (CAPM). I address the Sharpe ratio and the Treynor ratio because these two gives better easy view for an investor to evaluate the hedge fund performance by themselves. However, the Sharpe ratio and the Treyneo ratio measure the excess return of per unit of risk for an investment asset. These two are used to understand how well the return of an asset compensates the investor for the risk taken. When comparing two assets each with the expected return of fund against the same benchmark with risk free return, the asset with the higher Sharpe ratio gives more return for the same risk. As a result investor can easily understand where to invest. In this paper I use total 287 funds including different types of hedge funds like- Event driven (31), Hedge fund (54), Global macro (37) and Market neutral (165). As a benchmark I use FTSE100 and for the risk free rate I use UK 10 year Treasury bond. All data were collected from the DataStream which is run by Thomson Reuters the worlds leading source of intelligent information for businesses and professionals (http://thomsonreuters.com/). 1.6- Definition of the key terms: Hedge fund: In the early study by Francis C.C. Koh, Winston T.H. Koh , David K.C. Lee, Kok Fai Phoon (2004) stated in their report that Hedge Funds are innovative investment structures that were first created more than 50 years ago by Alfred Winslow Jones. He established a fund with the following features: (a) He set up hedges by investing in securities that he determined as undervalued and funding these positions partly by taking short positions in overvalued securities, creating a market neutral position; (b) He also designed an incentive fee compensation arrangement in which he was paid a percentage of the profits realized from his clients assets; and (c) He invested his own investment capital in the fund, ensuring that his incentives and those of his investors were aligned and forming an investment partnership. Most modern hedge funds possess the above listed features, and are set up as limited partnerships with a lucrative incentive-fee structure. In most hedge funds, managers also often have a significant portion of their own capital invested in the partnerships. The term hedge fund has been generalized to describe investment strategies that range from the original market-neutral style of Jones to many other strategies and opportunistic situations, including global/macro investing. On the other report by Liang, B. (1999) stated on his report that there are two major types of hedge funds, one is inshore and another is offshore. Onshore funds are limited partnerships of no more than 500 investors. Offshore funds are limited liability corporations or partnerships established in the tax neutral jurisdictions that allow investors an opportunity to invest outside their own country and minimize their tax liabilities. Due to the large variety of hedge fund investing strategies, there is no standard method to classify hedge funds smartly. There are at least 8 major databases set up by data vendors and fund advisors. I follow the classification used by Eichengreen and Mathieson (1998), which relied on the MAR/Hedge database. Under this classification, there are 8 categories of hedge funds with 7 differentiated styles and a fund-of-funds category. For my paper I chose three different categories, which are as follows: (a) Event driven funds. These are funds that take positions on corporate events, such as taking an arbitraged position when companies are undergoing re-structuring or mergers. For example, hedge funds would purchase bank debt or high yield corporate bonds of companies undergoing re-organization (often referred to as distressed securities). Another event-driven strategy is merger arbitrage. These funds seize the opportunity to invest just after a takeover has been announced. They purchase the shares of the target companies and short the shares of the acquiring companies. (c) Global/Macro funds refer to funds that rely on macroeconomic analysis to take bets on major risk factors, such as currencies, interest rates, stock indices and commodities. Opportunistic trading manager that makes profits from changes in global economies typically based in major interest rate shifts. To make profits managers uses leverage and derivatives. (d) Market neutral funds refer to funds that bet on relative price movements utilizing strategies such as long-short equity, stock index arbitrage, convertible bond arbitrage and fixed income arbitrage. Long-short equity funds use the strategy of Jones by taking long positions in selective stocks and going short on other stocks to limit their exposure to the stock market. Stock index arbitrage funds trade on the spread between index futures contracts and the underlying basket of equities. Convertible bond arbitrage funds typically capitalize on the embedded option in these bonds by purchasing them and shorting the equities. Fixed income arbitrage bet on the convergence of prices of bonds from the same issuer but with different maturities over time. This is the second largest grouping of hedge funds after the Global category. Source Eichengreen and Mathieson (1998). 2.1.2- Current scenario of hedge funds: Chapter two Literature review: 2.1- History of hedge fund Despite the increasing interest and recent development, few studies have been carried out on hedge funds comparing to other investment tools like mutual funds. An analysis of Hedge Fund performance 1984-2000 by Capocci Daniel using one of the greatest hedge fund database ever used on his working paper (2796 individual funds including 801 dissolved), to investigate hedge funds performance using various asset-pricing models, including an extension from of Carharts (1997) model combined with Fama and French (1998), Agarwal and Naik (2000) models that take into account the fact that some hedge funds invest in emerging market bond. At the end they found that their model does a better job describing hedge funds behaviour. That appears particularly good for the Event Driven, Global Macro, US Opportunistic, Equity non-Hedge and Sector funds. Since the early 1990s, when around 2000 hedge funds were managing assets totalling capital of $60 billion, the subsequent growth in the number and asset base of hedge funds has never really been refuted. The industry only suffered from a relative slowdown in 1998, but since then has enjoyed a renewed vitality with an estimated total of 10,000funds managing more than a trillion US dollars by the end of 2006. The growing trend of the sector remained remarkably sustained during the stock market collapse that started in March 2000, when the NASDAQ composite Index reached an all-time high of 5,132 and finished three years later with a floor level of 1,253. In the meantime, the global met asset value (NAV) of hedge funds continued to grow at a steady rate of 10.6% (Van Hedge Funds Advisors International, 2002), contrasting with a decrease of 2.7% in the worldwide mutual fund industry ( Investment Company Institute, 2003). In 2001, Capocci and Hubner(2004) estimated that there were 6,000 he dge fund managing around $400 billion. In 2007, Capocci, Duquenne and Hubner (2007) estimated that there were 10,000 hedge funds managing around $1 trillion. This is a growth of 11% in the number of funds and 26% in assets over six years (6PhD thesis paper by Daniel P.J. Capocci). Other studies from practitioners Hennessee (1994), and Oberuc (1994) also showed an evidence of superior performance in the case of hedge funds. Ackernann and Al. (1999) and Liang (1999) who compared the performance of hedge funds to mutual funds and several indices, found that hedge funds constantly obtained better performance than mutual funds. Their performance was not better than the performance of the market indices considered. They also indicated that the returns in hedge funds were more unstable than both the returns of mutual funds and those of market indices. According to Brown and Al. (1997) hedge funds showing good performance in the first part of the year reduce the volatility of their portfolio in the second half of the year (Capocci Daniel- An analysis of hedge fund performance 1984-2000). Taking all these results into account hedge funds seems a good investment tool. 6 PhD thesis paper by Daniel P.J. Capocci. Electronic copy available at: http//ssrn.com/abstract=1008319. 2.1.1- Facts and finding of development in hedge funds: As a result of flexible investment strategies, a better manager inventive alignment, sophisticated investors, and limited SEC regulations hedge funds have gained incredible popularity. In the report of Agarwal, V. and Naik, N. (2004) stated that it is well accepted that the world of financial securities is a multifactor world consisting of different risk factors, each associated with its own factor risk premium, and that no single investment strategy can span the entire risk factor space. Therefore investors wishing to earn risk premia associated with different risk factors need to employ different kinds of investment strategies. Sophisticated investors, like endowments and pension funds, seem to have recognized this fact as their portfolios consist of mutual funds as well as hedge funds.1 Mutual funds typically employ a long-only buy-and-hold-type strategy on standard asset classes, and help capture risk premia associated with equity risk, interest rate risk, default risk, etc. Howe ver, they are not very helpful in capturing risk premia associated with dynamic trading strategies or spread-based strategies. This is where hedge funds come into the picture. Unlike mutual funds, hedge funds are not evaluated against a passive benchmark and therefore can follow more dynamic trading strategies. Moreover, they can take long as well as short positions in securities, and therefore can bet on capitalization spreads or value-growth spreads. As a result, hedge funds can offer exposure to risk factors that traditional long-only strategies cannot. However, investor can create exposure like hedge funds by trading on their own account, in practice they encounter many frictions due to incompleteness of markets like the publicly traded derivatives market and the financing market. Moreover, the derivatives market for standardized contracts has grown a great deal in recent years, still it is very costly for an investor to create a customized payoff on individual securities. The same is true for the financing market as well, where investors encounter difficulties shorting securities and obtaining leverage. These frictions make it difficult for investors to create hedge fund-like payoffs by trading on their own accounts. According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) in 1990, the entire hedge fund industry was estimated at about US$20 billion. At of 2004, there are close to 7000 hedge funds worldwide, managing more than US$830 billion. Additionally, about US$200-300 billion is estimated to be in privately managed accounts. While high net worth individuals remain the main source of capital, hedge funds are becoming more popular among institutional and retail investors. Funds of hedge funds and other hedge fund-linked products are increasingly being marketed to the retail market. While hedge funds are well established in the United States and Europe, they have only begun to grow aggressively in Asia. According to Asia Hedge magazine, there are more than 300 hedge funds operating in Asia (including those in Japan and Australia), of which 30 were established in year 2000 and 20 in 2001. In 2003, 90 new hedge funds were started in Asia, compared with 66 in 2002, according to an estimate by th e Bank of Bermuda. In 2004 more than US$15 billion, hedge fund investments in Asia are expected to grow rapidly. Several factors support this view. Asian hedge funds currently account for a tiny slice of the global hedge fund pie and a mere trickle of the total financial wealth of high net worth individuals in Asia. Hedge funds have posted attractive returns. From 1987 to 2001, the Hennessee Hedge Fund Index posted annualised returns of 18%, higher than the SPs 13.5%. Hedge funds are seen as a natural hedge for controlling downside risk because they employ exotic investment strategies believed to generate returns that are uncorrelated to traditional asset classes. Hedge funds vary in their strategies. So-called macro funds, such as Quantum Fund, generally take a directional view by betting on a particular bond market, say, or a currency movement. Other funds specialize in corporate events, such as mergers or bankruptcies, or simply look for pricing anomalies the stock markets. Hedge funds vary widely in both their investment strategies and the amount of financial leverage. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) There are a number of factors behind the meteoric rise in demand for hedge funds. The unprecedented bull-run in the US equity markets during the 1990s expanded investment portfolios. This led an increased awareness on the need for diversification. The bursting of the technology and Internet bubbles, the string of corporate scandals that hit corporate America and the uncertainties in the US economy have led to a general decline in stock markets worldwide. This in turn provided fresh impetus for hedge funds as investors searched for absolute returns. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Unlike registered investment companies, hedge funds are not required to publicly disclose performance and holdings information that might be construed as solicitation materials. Since the early 1990s, there has been a growing interest in the use of hedge funds amongst both institutional and high net worth individuals. Due to their private nature, it is difficult to obtain adequate information about the operations of individual hedge funds and reliable summary statistics about the industry as a whole. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) Hedge funds are known to be growing in size and diversity. As at the end of 1997, the MAR/Hedge database recorded more than 700 hedge fund managing assets of US$90 billion. This is only a partial picture of the industry, as many funds are not listed with MAR/Hedge. In practical terms, it is not easy to estimate the current size of the hedge fund industry unless all funds are regulated or obligated to register their operations with a common authority. Brooks and Kat (2001) estimated that, as at April 2001, there are around 6000 hedge funds with an estimated US $400 billion in capital under management and US $1 trillion in total assets. (Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) According to Koh, F., Koh,W,. Lee, D,. and Phoon, K. (2004) three interesting features differentiate hedge funds from other forms of managed funds. Most hedge funds are small and organized around a few experienced investment professionals. In fact, more than half of U.S Hedge Funds manage amounts of less than US$25 million. Further, most hedge funds are leveraged. It is estimated that 70 per cent of hedge funds use leverage and about 18% borrowed more than one dollar for every dollar of capital. (See Eichengreen and Mathieson (1998). Another peculiar feature is the short life span of hedge funds. Hedge funds have an average life span of about 3.5 years (See Stefano Lavinio (2000) pp 128). Very few have a track record of more than 10 years. These features lead many to view hedge funds, as risky and opportunistic. In the early study by Fung and Hsieh (2001), they use option like payoffs to view the risks of trend following hedge funds. They saw that the trend followers are typically commodity trading advisors (CTAs) who attempt to profit from trends in commodity prices using technical indicators. According to Fung and Hsieh (2001) trend followers are particularly interesting in that not only are their returns uncorrelated with the standard equity, bond, currency, and commodity indices, but their returns tend to exhibit option like features. They tend to be large and positive during the best and worst performing months of world equity indices. They cite evidence by Fung and Hsieh (1997) who show that if one divided up the states of the world into five states based on the return on the MSCI equity world index, trend followers tend to outperform when the MSCI equity return is at its lowest and highest. The relationship between trend followers and the equity market is non-linear and U-shaped. Alth ough returns of trend following funds have a low beta against equities on average, the state-dependent betas tend to be positive in up-markets and negative in down markets. As a result, Fung and Hsieh (2001) assume that the simplest trend following strategy has the same payout as a structured option known as the look back straddle. The owner of a look back call option has the right to buy the underlying asset at the lowest price over the life of the option. Similarly, a look back put option allows the owner to sell at the highest price. The combination of these two options is the look back straddle, which delivers the ex-post maximum payout of any trend following strategy. Fung and Hsieh (2001) then demonstrate empirically that look back straddle returns resemble the returns of trend following hedge funds. Building on this pioneer work, Fung and Hsieh (2004) propose seven factors that explain aggregate hedge fund returns. These seven factors include the excess return on the SP 500 index, the Wilshire small cap minus large cap index return, the term spread, the credit spread, and trend following factors for bonds, currencies, and commodities. They show that their seven factor model well explains variation in aggregate hedge fund returns. In addition, they find that equity long/short hedge funds tend to load positively on the SP 500 index factor and the small cap minus large cap factor. These results are consistent with the observation that equity long/short hedge funds typically have a small positive exposure to stocks and tend to be long small stocks and short large stocks. Fung and Hsieh (2004) also find that fixed income funds on the other hand tend to load negatively on the change in the credit spread, where the credit spread is measured as the difference between the yield on Moodys Baa bonds and the yield on the 10-year constant maturity Treasury bond. The reason is that fixed income funds typically buy bonds with lower credit ratings and/or less liquidity and then hedge the interest rate risk by shorting US Treasury bonds, which have the highest credit rating and are more liquid. However, Agarwal and Naik (2004) also propose a multi-factor model to explain hedge fund risks. They find that non-linear option like payoffs are not restricted to trend followers and risk arbitrageurs, but are an integral feature of payoffs for a wide range of hedge fund strategies. In particular they observe that the payoffs on a large number of hedge fund strategies look like those from writing a put option on the equity index. These strategies include risk arbitrage, distressed debt, convertible arbitrage, and relative value arbitrage. Consistent with the exposure of these strategies to the risks borne by sellers of equity index put options, Agarwal and Naik (2004) find that these hedge funds suffer from significant left tail risk which tends to coincide with severe market downturns. The performance of hedge fund in 2008 was very shocking like more than ten years ago. Teo, M (2009) stated that in the month of August 1998 alone LTCM lost 45% of its capital in the wake of the massive liquidity event triggered by the Russian rubble default. Lots of academic literature has shown that the year 2007 and 2008 was the worst performance of hedge fund. As we know that hedge fund managers make portfolio by taking position in equity market and another fund, but unfortunately the world equity market goes downside. As a result investors who wish to weather future financial maelstroms should take note of the non-linear relationship between hedge fund returns and the equity market. 2.3- Limitations (previous) With respect to lightly regulated investment vehicles with great treading flexibility, hedge funds often pursue highly sophisticated investment strategies. Hedge funds promise absolute returns to their investor leading to a belief that they hold factor-neutral portfolios. With this in mind, hedge funds have some limitations. In the early studies many researchers discussed and explain that obstacles. First of all if we consider the measurement model of hedge funds performance, most of the researcher use traditional performance measure model like, Sharpe ratio, Treynor ratio and Jensen alpha which are not adequate for the performance evaluation of hedge funds. Fung and Hsieh (2000) and Roy (2003) stated that is incorrect to use these performance measures t evaluate the hedge funds strategies. Brooks and Kat (2002), Kat (2003), Mahdavi (2004) and Murguia and Umemoto (2004) also mentioned that the Sharpe ratio does not represent the true performance of hedge funds because it does not take into consideration the asymmetry returns of these funds. As a result Perello (2007) propose to use the downside risk framework like Sortino ratio, the upside potential ratio and Omega measure as alternative performance measure. Moreover, Chung, Rosenberg and Tomeo (2004) and Scherer (2004) showed that Sortino ratio makes it possible to the investors to evaluate the risk and the performance of the h edge funds more sustainably than Sharpe ratio. Secondly, according to Ackermann et al. (1999) and to Fung and Hsieh (2000), two upward biases exist in the case of hedge funds. They do not exist in the case of mutual funds, and they both have an opposite impact to the survivorship bias. Survivorship bias is an important issue in hedge funds performance studies (see Carhart and al. 2000). This bias is present when a database contains only funds that have data for the whole period studies. In this case, there is a risk of overestimating the mean performance because the funds that would have ceased to exist because of their bad performance would not be taken into account. The two upward biases exist because, since hedge funds are not allowed to advertise, they consider inclusion in a database primarily as a marketing tool. The first phenomenon stressed by Ackermann and al. (1999) and called the self-selection bias is present because funds that realize good performance have less incentive to report their performance to data providers in order to attract new investors. Malkiel, B. and Saha, A. (2005) stated in their report that Databases available at any point in time tend to reflect the returns earned by currently existing hedge funds but they do not include the returns from hedge funds that existed at some time in the past but are presently not in existence (i.e., the truly dead funds) or exist but no longer report their results (the defunct funds). Unsuccessful hedge funds have difficulties obtaining new assets. Hence, they tend to close, leaving only the more successful funds in the database. But some funds stop reporting not because they are unsuccessful but because they do not want to attract new investment. The second point called instant history bias or backfilled bias (Fung and Hsieh 2000) occurs because after inclusion a funds performance history is backfilled. This may cause an upward bias because funds with less satisfactory performance history are less likely to apply for inclusion than funds with good performance history (Capocci Daniel 2001, An analysis of hedge fund performance 1984- 2000).

Soulless Technology in William Gibson’s Burning Chrome Essay -- Willia

Soulless Technology in William Gibson’s Burning Chrome An old adage states that the eyes are the windows to the soul. What if, however, those eyes have a trademark name stamped onto them? William Gibson’s short story "Burning Chrome" depicts an advanced but soulless society where most of the technological advances are portrayed as being perverted by commercialization and human mechanization, rather than dedicated to improving the quality of life. This paper will touch upon the frivolous consumerism of as well as the dehumanizing uses of technology in the world of Automatic Jack, the reader’s companion throughout the story. Perhaps the most visible example of this perversion is the high degree of commercialized technology in their society. The character of Rikki, a female friend of Jack’s, has her heart set on a pair of Zeiss Ikon eyes, and, as Jack describes them as a "Brand of the stars" and "Very expensive" (Gibson 1015). Though she desires 20/20 vision, Rikki does not want the eyes because they will help her see better; rather, she has an entire catalogue full of the most fashionable and stylish eyes of the season. Rikki’s friend Tiger gets his eyes redone simply so he can go to Hollywood, risking his eyesight with the not-as-reliable Sendai brand. The fact that anyone would put fashion and fame before something as precious and irreplaceable as optic nerves goes beyond foolish consumerism. It becomes reckless consumerism, putting goods above all other concerns for self and others. As for Tiger himself, Jack describes him in the following manner: He had the kind of uniform good looks you get after your seventh trip to the surgical boutique; he’d probably spend the rest of his life looking vaguely like each new season’... ... newest way to connect to others without needing human interaction. It’s impossible to know when technology will become "too" invasive and society "too" hollow, but by the time anyone looks hard enough, nothing but empty, soul-devoid, trademarked windows will blink in return. Bibliography Gibson, William Ford. "Burning Chrome." The Prentice Hall Anthology Of Science Fiction and Fantasy. Ed. Garyn G. Roberts. NJ: Prentice Hall, 2001. 1006- 1019. Maddox, Tom. "Cobra, She Said: An Interim Report on the Fiction of William Gibson." Hall 142-144. Hall, Sharon K., ed. Contemporary Literary Criticism. Vol. 39. New York: Gale Research, Inc., 1986. Coleman, Howard. "Other Voices, Other Voices." Matuz 129-130. Greenland, Colin. "Into Cyberspace." Matuz 130-131. Matuz, Roger, ed. Contemporary Literary Criticism. Vol. 63. New York: Gale Research, Inc., 1991.

Musical Subculture

Punk rock is primarily a British musical genre that reached its creative and popular peak during 1977 and 1978. The precursors of punk rock were those American and British groups of the late 1960s and early 1970s who played rock music with an aggressive feel, with loud distorted guitars and nihilistic lyrics. While most punk rock groups drew influence from some earlier bands, they were specific about rejecting the majority of music produced in the early 1970s. In particular, punk rock musicians did not like what they termed the hippie music of progressive rock. Central to any discussion of punk is the band The Sex Pistols (Sabin 78). Not the first punk rock group but certainly the most influential was The Sex Pistols. The group was formed in late 1975. Shortly after this the band started touring on the pub rock and college gig circuits. Early songs such as ‘Submission’ and ‘Anarchy In The UK’ lyrically mocked what the band perceived to be the traditional and boring nature of British society. They were against a backdrop of rambunctious guitars and drums. It was not long before The Sex Pistols attracted a fanatical following of punks equally disillusioned with British society and culture (Sabin 123). The media furore that made early Sex Pistol’s gigs was nothing in comparison to the outrage that emerged after their actions in December 1976. Following the cancellation of an appearance by the group Queen, The Sex Pistols were invited to appear on the early evening London television show Today. After drinking heavily before the show, the band verbally insulted interviewer Bill Grundy, and caused a tabloid storm with their explicit language. This set the stage for the release of their ‘God Save The Queen’ single, a week before the Queen’s Jubilee weekend in June 1977. Again tabloid newspapers and the public in general were shocked by the band’s direct attacks upon an institution central to British society, the monarchy. In particular the record cover, created by the band’s ‘Art Director’ Jamie Reid, created a sensation with its image of the Queen with a safety pin through her nose (Sabin 123-125). ‘God Save The Queen’ was The Sex Pistol’s high point. Later in 1977 the band released their one and only official album, Never Mind The Bollocks. Like all the band’s releases it came in a trademark Jamie Reid cover that mimicked the style of a ransom note, and contained direct attacks on central facets of British culture. The Sex Pistols found that they were unable to obtain gigs in Britain because promoters and venues showed an unwillingness to allow them to perform. Band tensions reached a head following the band’s tour of the USA, and they split in early 1978. The band’s lead singer Johnny Rotten reverted to his real name John Lydon, formed Public Image Limited, and left the punk rock genre. The band struggled on in his absence, but the drug-related death of bass player Sid Vicious led to their inevitable demise (Strinati 89). However, some commentators claim that the ‘spirit of punk’ is not to be found in those groups who sound like their 1970s counterparts, but in the house, techno and jungle acts who make music for reasons other than commercial gain. For many of the first generation of punk rock groups, making music was about ‘making do’ with the available technology, and they were therefore opposed to the kind of learned musicianship of previous rock genres. It is understandable that house, jungle and techno acts, with their cheap sampling equipment and their own production technology, consider themselves to be the direct descendants of the first punk rock bands. The Sex Pistols were attracting media attention, a whole wave of other punk rock bands were forming, notably The Damned and The Clash in London and The Buzzcocks in Manchester. Although none received the same mixture of notoriety and fame as The Sex Pistols, many considered them to be musically more interesting. In the wake of the successes of The Sex Pistols, many young people began to form their own bands in 1977 and 1978. In particular these bands developed a ‘DIY’ attitude to making music. The Sex Pistols developed different styles of punk, but maintained a central ethos of opposition to mainstream British society. Either implicitly or explicitly, this political ethos was central to punk rock (Sabin 103). The degree to which The Sex Pistols has influenced subsequent rock styles is hotly debated. Throughout the 1980s, new bands formed and drew inspiration from the events of 1976 and 1977. In particular, indie bands’ faith in the seven-inch single and suspicion of the LP has been interpreted as directly related to punk’s ‘DIY’ approach. Musically, The Sex Pistols has been particularly influential upon American bands, with Nirvana, Hole and Mudhoney all having had chart successes in Britain. These ‘post-punk’ bands developed a similar sound to the stripped-down aggression of the first generation of The Sex Pistols. Some British rock groups, such as The Wildhearts, Therapy and the Manic Street Preachers also have their musical roots in punk rock (Curtis 60). In fact, the absence of a symbol of class solidarity made The Sex Pistols more important than it had ever been before. Moreover, punks realized that they no longer had to be passive spectators, for rock ‘n' roll had always meant self assertion of one kind or another. In this sense, the key punk song is the Sex Pistols' â€Å"No Feelings,† especially the line, which Johnny Rotten screams over their version of the wall of sound, â€Å"I'm in love with myself.† What we have here is an assertion, not of a political program, but of the discovery of what Daniel Yankelovich called personal entitlement. The Sex Pistols made a terrific impact because through them their audience discovered that they didn't have to go through their lives saying â€Å"sir.† It was as though they had discovered the working-class equivalent of black pride, and had realized that they didn't play the equivalent of Uncle Tom to their betters—or to their peers, either. After seeing them for the first time, Coon noted: What impressed me most†¦was their total disinterest in pleasing anybody except themselves. Instead, they engaged the audience, trying to provoke a reaction which forced people to express what they felt about the music. Quite apart from being very funny, their arrogance was a sure indication that they knew what they were doing and why (Coon 70). For many people, spiked hair and dog collars had become a joke, the domain of soda pop ads and television dramas. But did punk disappear with the utter sell-out of its foremost corporate spokesband, the Sex Pistols? Did punk rock vanish when pink mohawks could be found only on pubescent heads at the shopping mall? If the spectacular collapse of punk rock was also the collapse of spectacular subcultures? What crawled from the wreckage? In what ways can young people express their unease with the modern structure of feeling? A new kind of punk has been answering these questions. Today, to a certain extent, punk rock means post-punk – a nameless, covert subculture reformed after punk rock. To recap: early punk rock was, in part, simulated ‘anarchy;’ the performance of an unruly mob. So long as it could convince or alarm straight people, it achieved the enactment. For its play to work, punk rock needed a perplexed and frightened ‘mainstream’ off which to bounce. But when the mainstream proved that it needed punk rock, punk's equation was reversed: its negativity became positively commercial. As mainstream style diversified, and as deviant styles were normalized, punk rock had less to act against. Punk rock had gambled all its chips on public outcry, and when it could no longer captivate an audience, it was wiped clean. Post-punk, or contemporary punk, has foregone these performances of anarchy and is now almost synonymous with the practice of anarchism. Long after the ‘death’ of classical punk rock, post-punk and/or punk subcultures coalesce around praxis. The Sex Pistols called attention to themselves with their clothing as well as with their music. The torn clothing, which they wore, like the tattered shirts, the chains wrapped around their bodies, the safety pins in their cheeks, said something of great importance. The Sex Pistols created a fresh moral panic fuelled by British tabloids, Members of Parliament, and plenty of everyday folk. Initially, at least, they threatened ‘everything England stands for’: patriotism, class hierarchy, ‘common decency’ and ‘good taste’ (Curtis 98). When the Sex Pistols topped the charts in Britain, and climbed high in America, Canada, and elsewhere, punk savoured a moment in the sun: every public castigation only convinced more people that punk was real. Fortunately, The Sex Pistols meant more than excitement in a few clubs and big sales in safety pins. The Sex Pistols also produced one of the great bands of the seventies—The Clash. If rock ‘n' roll is a universe, The Clash and the Sex Pistols are different planets. Works Cited Coon, Caroline. The New Wave Punk Explosion, New York: Hawthorn Books, Inc., 1978. Curtis, Jim. Rock Eras: Interpretations of Music and Society, 1954-1984. Bowling Green State University Popular Press: Bowling Green, OH, 1987. Sabin, Roger. Punk Rock, So What? The Cultural Legacy of Punk. Routledge: London, 1999. Strinati, Dominic. Come on Down? Popular Media Culture in Post-War Britain. Stephen Wagg. Routledge: New York, 1992.               

Facebook Puts Other Companies Underneath Its Wings

IntroductionFacebook is considered these days as a leader for the social networking websites, Facebook is such a great success story which officially came out in 2004 created by Mark Zuckerberg and his classmates at Harvard University. On October 28, 2003, when they were in the second year, Zuckerberg and his team started the idea by launching a website called â€Å"Facemashâ€Å", after that, for many reasons the website was shut down by the school. On February 4, 2004, Zuckerberg started again with his team a new website called â€Å"Thefacebook†, they worked hard to develop the website and they divided the tasks professionally; Eduardo Saverin is responsible for the business side, Dustin Moskovitz for programming issues, Andrew McCollum for the graphic design, and Chris Hughes. Facebook has been written and developed using C++ and PHP language.They worked together such as a great talent team until the website was expanded to many schools (Who Invented Facebook, ND). In my point of view, Facebook made a difference in the social media world by making the website so attractive to the users, right now Facebook has over than one billion active users, in addition, Facebook has a second global rank and a second US rank according to the Alexa traffic rank, and the visitors of the site are viewed as an average of 18.1 pages per day (Facebook Rank, ND). So we are going in this paper to discuss all aspects and terms of my thesis statement and verify it as well. Moreover, we are going to review one of the strategy that Facebook has and do SWOT analysis as well. My thesis statement summarized as the following â€Å"Facebook puts other companies underneath its wings by imposing Ads network strategies, marketing strategies and as well as social media strategies†.The Five Porters ForcesRisk of entry by potential competitors: The barriers of entry to other  competitors of Facebook is very high, since Facebook has the criteria of the users satisfaction which makes the users more loyal to Facebook, for instance, I would say Google is a potential competitor to Facebook, hence, the risk of entry is low. Intensity of rivalry among established firms: Twitter is one of the most competitors to Facebook, since Twitter has Five Hundred million users on its social network as well as has the tenth rank on Alexa traffic rank; furthermore, Facebook and Twitter are fighting to make the users more attractive by coming up with new ideas in the network social networks to make it more easier to the end users.Bargaining power of buyers: Since Facebook offers social networking services to the end users, Facebook does know the importance of the user’s power to make them successful by offering unique and flexible tools for the social networking, moreover, Facebook team should take into considerations the feedbacks and reviews of the end users. Bargaining power of suppliers: In Facebook case, there’s no specific supplier because they are offeri ng online services, they could be the suppliers themselves, and we would consider the government is a supplier for Facebook; since the government monitor and control the social networks. Threat of substitutes: The threat of substitutes for Facebook is represented by any social networking website like Twitter or Myspace which they are really rivals, so Facebook team should update the website from time to time to make the users satisfied and to face the user’s daily demands on the social network.Facebook SWOT AnalysisStrengths: Facebook has the second rank at Alexa as a global rank and second rank in the US (Facebook Rank,ND). In addition, Facebook now has over than one billion active users; Facebook has announced its revenue by gaining more than $150 million from the mobile advertising (Turcan, 2012). Furthermore, Facebook supports more than 70 languages for the users across the world which makes Facebook attractive for many users their mother language is not English. Now Face book has a popular brand name and it has been used as a reference in many movies or even in the business cards (FACEBOOK SWOT, ND). Weaknesses: There are many faked accounts and duplicated accounts that cannot be identified easily. Also, people say Facebook is secretly gathering information about them which may leave an impression to remove their accounts.Moreover, Facebook posted a loss in last two quarters which will  impact its stocks (Turcan, 2012). Opportunities: Researchers can take advantage of using Facebook by gathering data for surveys purposes. Moreover, Ads prices are still going up as Facebook recently announced which will have the investors buy new stocks. Also, Facebook can be used as a market place; people can sell and buy items through Facebook (FACEBOOK SWOT, ND). Threats: China government doesn't allow Facebook to operate out there in China; since china has a huge population. In addition, it is probably that users may switch to any other services like Google+ (F acebook Investment, 2012). Also, Twitter has a strong competition with Facebook in the market place and they are making unique features Faecbook doesn’t. Furthermore, there are many viruses have attacked Facbook as we have heard recently from news, and it might be a threat of ongoing hacking in the future. Facebook Marketing StrategyMarketing strategy is one of the interesting strategies that Facebook has; Facebook demonstrates its strategy by defining the target audience which means Facebook has grouping packages for all accounts by age, gender, profession and location which help the other companies to post their Ads on Facebook for specific class of people and as well as specific region, furthermore, Facebook helps other corporations to increase the traffic on their websites by creating an official page contains their official website link and contact information which truly helps the corporations to share their information, run certain events, post any kind of advertisemen ts and get more likes.I would say the more likes you get, the more success you are. In another hand, the non-profit organizations can take the advantage by creating a page on Facebook to get donations and find volunteers across all the world, moreover, Facebook provides the page owners with all kind of statistics tools and reports, those kind of reports are weekly and daily updated and included with the post quality, how many likes, page views and photo views.ConclusionIn my point of view, the marketing strategy makes Facebook an attractive destination for all kind of businesses to post Ads, upload photos, create events and communicate with people which leads rapidly to grow revenue of  Facebook. In my opinion, Facebook developers should work on the privacy settings to make sure that the users will stick with them for a long period of time. Moreover, the developer team should do something to prevent the existence of the duplicated accounts and the faked accounts by monitoring the IP addresses of the user’s computer. Finally, Facebook is still in the fore beating up Twitter, My Space and other social networking websites, as I mentioned before, Facebook has been a leader for the other online social networking services, I would say Facebook made a difference in the information revolution these days and created a competitive environment in the market place. Facebook Puts Other Companies Underneath Its Wings IntroductionFacebook is considered these days as a leader for the social networking websites, Facebook is such a great success story which officially came out in 2004 created by Mark Zuckerberg and his classmates at Harvard University. On October 28, 2003, when they were in the second year, Zuckerberg and his team started the idea by launching a website called â€Å"Facemashâ€Å", after that, for many reasons the website was shut down by the school.On February 4, 2004, Zuckerberg started again with his team a new website called â€Å"Thefacebook†, they worked hard to develop the website and they divided the tasks professionally; Eduardo Saverin is responsible for the business side, Dustin Moskovitz for programming issues, Andrew McCollum for the graphic design, and Chris Hughes. Facebook has been written and developed using C++ and PHP language. They worked together such as a great talent team until the website was expanded to many schools (Who Invented Facebook, ND).In my point of view, Facebook made a difference in the social media world by making the website so attractive to the users, right now Facebook has over than one billion active users, in addition, Facebook has a second global rank and a second US rank according to the Alexa traffic rank, and the visitors of the site are viewed as an average of 18. 1 pages per day (Facebook Rank, ND). So we are going in this paper to discuss all aspects and terms of my thesis statement and verify it as well. Moreover, we are going to review one of the strategy that Facebook has and do SWOT analysis as well.My thesis statement summarized as the following â€Å"Facebook puts other companies underneath its wings by imposing Ads network strategies, marketing strategies and as well as social media strategies†. The Five Porters Forces Risk of entry by potential competitors: The barriers of entry to other competitors of Facebook is very high, since Facebook has the criteria of the users satisfaction which m akes the users more loyal to Facebook, for instance, I would say Google is a potential competitor to Facebook, hence, the risk of entry is low.Intensity of rivalry among established firms: Twitter is one of the most competitors to Facebook, since Twitter has Five Hundred million users on its social network as well as has the tenth rank on Alexa traffic rank; furthermore, Facebook and Twitter are fighting to make the users more attractive by coming up with new ideas in the network social networks to make it more easier to the end users.Bargaining power of buyers: Since Facebook offers social networking services to the end users, Facebook does know the importance of the user’s power to make them successful by offering unique and flexible tools for the social networking, moreover, Facebook team should take into considerations the feedbacks and reviews of the end users. Bargaining power of suppliers: In Facebook case, there’s no specific supplier because they are offering online services, they could be the suppliers themselves, and we would consider the government is a supplier for Facebook; since the government monitor and control the social networks.Threat of substitutes: The threat of substitutes for Facebook is represented by any social networking website like Twitter or Myspace which they are really rivals, so Facebook team should update the website from time to time to make the users satisfied and to face the user’s daily demands on the social network. Facebook SWOT Analysis Strengths: Facebook has the second rank at Alexa as a global rank and second rank in the US (Facebook Rank,ND).In addition, Facebook now has over than one billion active users; Facebook has announced its revenue by gaining more than $150 million from the mobile advertising (Turcan, 2012). Furthermore, Facebook supports more than 70 languages for the users across the world which makes Facebook attractive for many users their mother language is not English. Now Faceboo k has a popular brand name and it has been used as a reference in many movies or even in the business cards (FACEBOOK SWOT, ND). Weaknesses: There are many faked accounts and duplicated accounts that cannot be identified easily.Also, people say Facebook is secretly gathering information about them which may leave an impression to remove their accounts. Moreover, Facebook posted a loss in last two quarters which will impact its stocks (Turcan, 2012). Opportunities: Researchers can take advantage of using Facebook by gathering data for surveys purposes. Moreover, Ads prices are still going up as Facebook recently announced which will have the investors buy new stocks. Also, Facebook can be used as a market place; people can sell and buy items through Facebook (FACEBOOK SWOT, ND).Threats: China government doesn't allow Facebook to operate out there in China; since china has a huge population. In addition, it is probably that users may switch to any other services like Google+ (Facebook Investment, 2012). Also, Twitter has a strong competition with Facebook in the market place and they are making unique features Faecbook doesn’t. Furthermore, there are many viruses have attacked Facbook as we have heard recently from news, and it might be a threat of ongoing hacking in the future. Facebook Marketing StrategyMarketing strategy is one of the interesting strategies that Facebook has; Facebook demonstrates its strategy by defining the target audience which means Facebook has grouping packages for all accounts by age, gender, profession and location which help the other companies to post their Ads on Facebook for specific class of people and as well as specific region, furthermore, Facebook helps other corporations to increase the traffic on their websites by creating an official page contains their official website link and contact information which truly helps the corporations to share their information, run certain events, post any kind of advertisements and get more likes.I would say the more likes you get, the more success you are. In another hand, the non-profit organizations can take the advantage by creating a page on Facebook to get donations and find volunteers across all the world, moreover, Facebook provides the page owners with all kind of statistics tools and reports, those kind of reports are weekly and daily updated and included with the post quality, how many likes, page views and photo views. Conclusion In my point of view, the marketing strategy makes Facebook an attractive destination for all kind of businesses to post Ads, upload photos, create events and communicate with people which leads rapidly to grow revenue of Facebook.In my opinion, Facebook developers should work on the privacy settings to make sure that the users will stick with them for a long period of time. Moreover, the developer team should do something to prevent the existence of the duplicated accounts and the faked accounts by monitoring the IP addres ses of the user’s computer. Finally, Facebook is still in the fore beating up Twitter, My Space and other social networking websites, as I mentioned before, Facebook has been a leader for the other online social networking services, I would say Facebook made a difference in the information revolution these days and created a competitive environment in the market place.