HFR Index Due Diligence Guide

Choosing the right benchmark for hedge fund performance evaluation is important for any institutional asset owner

The purpose of the benchmark is to provide the investor with the appropriate context to evaluate the performance of the investment and decide either if they are satisfied with the investment or if they should invest in something else. Essentially, the benchmark is the opportunity cost of making the investment.

The benchmark must take into consideration the compositional similarity of the investment to the benchmark and consider both risk and return over different timeframes and market cycles. There are important differences between indices and benchmarks and important qualities which define a true benchmark.

HFR offers a robust hedge fund due diligence framework for institutional investors. By compiling the HFR Index Due Diligence Guide, we hope to assist investors with streamlining the due diligence process for hedge fund portfolio benchmark selection. For over 30 years, investors have relied upon HFR Indices as a reference point to evaluate hedge fund strategies, assess risk, and refine their investment processes.

To this end, HFR is pleased to provide a comprehensive guide for Pension Funds, Endowments, Foundations, Family Offices and Sovereign Wealth Funds to use when evaluating existing, or selecting new, benchmarks for their hedge fund portfolios.

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Please contact HFR at IndexData@hfr.com for more information.