Compare hedge-fund outcomes with feasible portfolio alternatives.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to Hedge Fund Performance 1990-2000: Do the "Money Machines" Really Add Value? by Gaurav S. Amin; Harry M. Kat.

Decision in practice

A hedge fund earns a premium over cash while selling downside protection. Cash alone cannot reveal the risk the family has accepted.

Committee assignment

Construct a feasible alternative with comparable downside exposure and liquidity. Compare net outcomes during stress and assess redemption restrictions.

Record and decision rule

Record the alternative and loss scenario. Withhold diversification credit when the premium depends on the same tail event as existing assets.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.