Can hedge funds really time the market?

By all accounts, hedge funds are having a terrible month, among the worst since the industry started keeping score. So it might surprise people to hear that some researchers have concluded that hedge funds have a statistically significant ability to time the market--historically speaking. AllAboutAlpha.com notes that researchers from Citigroup and Athens University of Economics & Business found that there was a "significant correlation between hedge fund market beta and market performance itself." In other words, some hedge funds became slightly more correlated with the market before the market rose. But this correlation apparently does not hold for short sellers. Indeed, the big funds do not seem to have timed the recent downturn very well. A horrible August and September probably ensures a had year, but the effect on longer-term performance is still unclear.

For more:
- here's the article

Related Articles:
Navigating the Hedge Fund Maze - September 2008
Navigating the Hedge Fund Maze - August 2008