Skin or Skim? Inside Investment and Hedge Fund Performance

Hedge funds with more manager inside investment deliver higher performance.

Arpit Gupta, Kunal Sachdeva

Management Science 71.4 (2024): 3357-3383

Hedge funds with more manager inside investment deliver higher performance.

Funds with greater inside investment outperform on a factor-adjusted basis. We attribute this to capacity constraints: insider funds are smaller and less likely to accept excess inflows, suggesting that managers with “skin in the game” prioritize performance over asset gathering.

Paper Data
Cite
@article{gupta2024skin,
  title={Skin or Skim? Inside Investment and Hedge Fund Performance},
  author={Gupta, Arpit and Sachdeva, Kunal},
  journal={Management Science},
  volume={71},
  number={4},
  pages={3357--3383},
  year={2024},
  doi={10.1287/mnsc.2024.4984}
}

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