Hedge funds perform best in their first two years and tend to produce lower but more consistent returns as they get bigger, a new study has found. The research, by Pertrac Financial Solutions, a software provider, found hedge funds less than two years old produced average returns of 17.5 per cent a year, against 11.84 per cent for those more than four years old, and also had lower volatility. Smaller funds also produced higher returns during the 10 years studied from 1996 to July last year, but were riskier, with higher volatility than large funds.
