Abstract
This study examines the profiles of 412 merged hedge funds (HFs), funds of HFs (FoHFs), and commodity trading advisors (CTAs) over the January 1994 through December 2013 period. We find that merged HFs, FoHFs, and CTAs are typically younger than live HFs but older than dead funds. We also find that merged HFs, FoHFs, and CTAs have relatively fewer constraints than live and dead ones. Specifically, they have shorter lockup period, use less leverage and request less value of purchasing initial investments or units. In addition, we find that past performance is a significant determinant for mergers. Thus, HF, FoHF, and CTA mergers could be motivated by a need to eradicate bad performing funds. These results are robust to different performance measures and hold after correcting for backfill bias and removing the effects of artificial serial correlation.
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