Schweser Mock #42 free, equity

cityboy

For a neutral equity hedge fund, what is the appropriate benchmark since it obviously isn’t the risk free rate?

LokiDog2

I’m confused. Why would anyone pay mgmt fee’s to someone to achieve the RfR? Is a market neutral fund really shooting for the RfR, or is it trying to achieve a higher return that isn’t tied to the market. (In which case the benchmark would have to the RfR + expected premium + mgmt costs)

Siddimaula

benchmark for market neutral, according to schweser is RfR plus a spread for mgmt costs.
they tried to throw you off with the added spread for mgmt costs, but generally a merket neutral strategy benchmark IS risk free rate