Aug 17, 2009
Q&A
Q&A: Hedge Funds and Securities Prices 
Stock market analysts often claim that hedge funds represent a significant percentage of trading volume in securities markets. What effect, if any, do hedge funds have on stock and bond prices?

EFF/KRF: Good question, but we know of no evidence on the matter. For example, hedge funds might make markets more efficient or they might reduce the accuracy of financial prices.

 
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CATEGORIES: Economic Policy (4), Academics (7), Investments (3), Market Efficiency (5), Financial Markets (2), Diversification (1), Behavioral Finance (1), Hedge Funds (2)
ABOUT FAMA AND FRENCH
Eugene F. Fama
The Robert R. McCormick Distinguished Service Professor of Finance at the University of Chicago Booth School of Business
Kenneth R. French
The Roth Family Distinguished Professor of Finance at the Tuck School of Business at Dartmouth College
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Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to Dimensional Fund Advisors LP.