Practical analysis for investment professionals
24 July 2013

How Media Coverage Affects Hedge Fund Returns (Podcast)

The impact of press coverage on global financial markets is well documented and has been studied by finance professionals for some time. As social media sources have taken more prominent positions in the global financial conversation, interest in the relationship between the media and markets has only increased.

In an article published in the May/June 2013 issue of the Financial Analysts Journal, “Media Coverage and Hedge Fund Returns,” Ronnie Sadka and his coauthor Gideon Ozik, CFA, conducted an in-depth investigation of a specific facet of the media/market question: press coverage of hedge funds and subsequent fund performance. CFA Institute Head of Publications Rodney Sullivan, CFA, discussed Sadka’s work with him for the most recent installment of our FAJ author interview series.

Sadka says that he and Ozik “started from some anecdotal evidence.” They noticed that many hedge fund managers tended to underperform after being covered in the press. Their research indicated that the empirical data support their hunch — but Sadka says that they didn’t stop there. “The more interesting piece of this,” he says, is that in terms of coverage, “not all sources are the same.” Coverage by different types of media sources and the nature of the coverage itself were correlated with different returns.

To hear Sadka discuss his complete findings and the areas that his research suggests aren’t fully understood by investors, listen to the complete interview above or download the MP3.

CFA Institute members can access the full article on the CFA Publications website.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Pat Light

Pat Light was an assistant editor at CFA Institute. Before joining the CFA Institute editorial staff, he worked as a teacher. Light has a bachelor's degree in English from Duke University.

1 thought on “How Media Coverage Affects Hedge Fund Returns (Podcast)”

  1. Very interesting – thanks for sharing. Curious though on whether you were able to adjust for the bias that funds being reported in the general media alone tend to be negatively biased (scandals and embarrassments), and those being reported only in corporate media (news wires, etc) are self-reporting positive news such as important new hires and big deals. Thanks

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