Are hedge funds really more skilled investment managers than mutual fund managers? It's a long-running debate in the industry. John Griffin of the University of Texas at Austin and Jin Xu of Zebra Capital Management, weigh in with a study that will appear in the Review of Financial Studies.

Their conclusion: "Hedge funds exhibit no ability to time sectors or pick better stock styles. Surprisingly, we find no convincing evidence of differential ability between hedge funds. Overall, our study raises serious questions about the perceived superior skill of hedge fund managers."

But this may be a straw man in some cases. The study looks at long-only equity investing. One could argue that the performance of many top hedge funds--John Paulson, for example--depends on other asset classes. But when it comes to long-only equity hedge fund managers, I buy their line. I doubt managers at these hedge funds have picked stocks appreciably better than their mutual fund peers.   

For more:
- here's the study

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