 Geopolitical risk hedging or timing: Evidence from hedge fund strategiesTianyi Ma and Xuting Zhou The North American Journal of Economics and Finance, 2024, vol. 74, issue C Abstract: An increasing number of investors are concerned about how they can diversify risks and profits amid surging geopolitical uncertainties. Using a geopolitical risk timing/hedging model, we investigate whether hedge fund managers can effectively hedge or time geopolitical risks by adopting different trading strategies. We find that excluding those in the global macro category, hedge funds with higher minimum investments and management fees exhibit greater success in hedging geopolitical risks. Meanwhile, global macro hedge funds, which have longer lockup periods, are more adept at timing geopolitical risks by increasing their market exposures. Furthermore, hedge funds which are the top geopolitical risk hedgers and timers demonstrate higher economic value than those in the bottom group over the subsequent one and three months. Our findings provide valuable insights into private investors’ selection of hedge funds during periods of heightened geopolitical risk. Keywords: Geopolitical risk; Hedge funds; Market timing ability (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:74:y:2024:i:c:s1062940824001657 DOI: 10.1016/j.najef.2024.102240 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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