Onshore and offshore hedge funds: Are they twins?

George Aragon, Bing Liang, Hyuna Park

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

Contrary to offshore hedge funds, U.S.-domiciled ("onshore") funds are subject to strict marketing prohibitions, accredited investor requirements, a limited number of investors, and taxable accounts. We exploit these differences to test predictions about organizational design, investment strategy, capital flows, and fund performance. We find that onshore funds are associated with greater share restrictions, more liquid assets, and a reduced sensitivity of capital flows to superior past performance. We also find some evidence that onshore funds outperform offshore funds, depending on the sample period. The results suggest that a fund's investment and financial policies reflect differences in investor clienteles and the regulatory environment.

Original languageEnglish (US)
Pages (from-to)74-91
Number of pages18
JournalManagement Science
Volume60
Issue number1
DOIs
StatePublished - Jan 2014

Fingerprint

Hedge funds
Investors
Capital flows
Prediction
Organizational design
Financial policy
Investment strategy
Clientele
Assets
Regulatory environment
Investment policy
Prohibition
Marketing
Fund performance

Keywords

  • Liquidity risk
  • Lockup provision
  • Master-feeder structure
  • Offshore hedge funds

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

Cite this

Onshore and offshore hedge funds : Are they twins? / Aragon, George; Liang, Bing; Park, Hyuna.

In: Management Science, Vol. 60, No. 1, 01.2014, p. 74-91.

Research output: Contribution to journalArticle

Aragon, George ; Liang, Bing ; Park, Hyuna. / Onshore and offshore hedge funds : Are they twins?. In: Management Science. 2014 ; Vol. 60, No. 1. pp. 74-91.
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