Cape Cod Times- The growing and lightly regulated hedge fund industry is attracting new players \u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u20ac\u009d business school professors eager to test their theories in a field known for big risks andoccasionally bigger rewards.<\/p>\n
Hedge funds are becoming a tempting tool for faculty members looking to sharpen research and giving a Wall Street perspective to their students, all while making some extra money.<\/p>\n
“MBAs and, to a less extent, Ph.D.s have taken over the financial world,” said Roger Ibbotson, a professor at the Yale University School of Management and co-founder of a hedge fund. “What we study is what people in finance know and use.”<\/p>\n
Hedge funds are a $1.1 trillion industry, largely unregulated and traditionally used by institutions and wealthy investors. Hedge funds profit by using unconventional techniques, such as short-selling, or betting on falling markets to make a profit during market downturns. They typically are active traders and can use techniques off limits to mutual funds.<\/p>\n
While hedge funds frequently outperform more traditional investments, some have failed spectacularly. Last year, Connecticut-based Amaranth Advisors wrongly guessed that tropical storms in the Gulf of Mexico would cause natural gas prices to spike. The storms didn’t develop and Amarath lost billions within a week, prompting lawsuits and congressional hearings.<\/p>\n