HF Naming: Gravitas indicates poor performance

A recently published study called "Hedge Fund Flows and Name Gravitas*" claims to "We also document that having a name with gravitas is associated with abnormal negative performance: high name gravitas funds have lower returns, alphas, Sharpe ratios and manipulation-proof performance measures, higher volatilities and maximum drawdowns as well as higher probabilities of extinction than the funds with lower name gravitas.

Any thoughts from you monkeys?

8 Comments
 

How do you know what name is considered gravitas? To be honest Top quant HFs have some pretty cool names if you ask me that also carry some gravitas like Renaissance tech or two sigma.

 

I really like the names you mentioned, Renaissance Technologies and Two Sigma. I also think that Icahn Enterprises sounds cool since it reminds me of Batman and Wayne Enterprises...

I skimmed through the paper, and they have some tables at the end about the determinants of the gravitas, along with some other statistics about the gravitas and inflows. I think it also says somewhere that the name gravitas sensitivity diminishes the more they learn about the fund, although it still seems pretty crazy.

 

I think coolness and gravitas are two different things, but I think this is more about people who intentionally name their funds something that imply strong performance or are associated with wealth generation - something like 'extreme value creation fund' would be considered to have 'gravitas'.

Life's is a tale told by an idiot, full of sound and fury, signifying nothing.
 

Hedge Fund Mad Lib:

1) {Color, obscure town name, mild adjective}: Black, Silver, Blue, York, Owl, Hope, Lone, Lexington 2) {Nature item, reference item}: Pine, Lake, Forest, River, Creek, Mountain, Square, Point 3) {Ending}: Capital, Fund, Capital Management, Advisors, Associates, LP, LLC

The coolest name is still Long Term Capital Management though, which is about as dry as it gets.

 
Best Response

I love this, though essentially all the 'good' names that follow have been taken. You can pretty much choose any name really though - the goal is to become prominent enough that YOU make the name, the name doesn't make you

LTCM is cool b/c of what it evokes (the mad scientists and the crash), not b/c it was just cool. If SAC wasn't a legendary fund it might sound lame to name your fund your initials. Lone Pine, Pershing, Viking - those names immediately evoke the performance/prestige of the funds they represent, not the other way around

 

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