Over the last decade, we have been witnessing a degrading quality of large institutional investors including their own investment research and outsourced due diligence. That trend has become obvious after collapsing the giants like Lehman Brothers or Bear Stearns, however, its causes have never been investigated in details.
The unique hedge fund risk assessment problems arising from numerous causes like non-normality of their distributions of returns, bizarre hedge fund indices and data biases are not new. One may easily find hundreds of articles and deep researches on the subject as well as a few proven investment frameworks offering feasible solutions by enhancing the commonly used risk metrics.
There are two distinct trends in finance software applications: tools designed to provide a deep insight into the matter and products aimed to make impressions. The latter dominate the industry, thus opening an apparently naive question - why do investors need analytical tools and applications at all?