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Hedge Funds Prove 'Smarter' In Study, Follow at Your Own Risk

Stocks with higher levels of hedge fund ownership displayed higher relative returns in a study, said Erin Gibbs, Equity Chief Investment Officer for S&P Capital IQ. Gibbs theorized that hedge fund ownership might lead to outperformance given the larger resources and motivating fee structures versus some other types of institutions like family offices. She added that the growth of ETFs and mutual funds have shifted stock ownership from individuals to institutions. Still, Gibbs advised against individual investors blindly chasing a well known hedge fund manager into a stock due to the high level of volatility and uncertainty involved.