![\"Timing](\"https:\/\/biznews.fiu.edu\/wp-content\/uploads\/2019\/07\/FIU-Business-Hedge-Funds-study.jpg\" "\\"Timing")
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Hedge funds that time the market ahead of positive and negative news within the manufacturing industry outperform competitors, research from FIU Business finds.<\/p>\n
The study found that timing the market ahead of positive and negative news within specific industries, versus overall market timing, pays off for skilled hedge fund managers and, ultimately, their investors. The manufacturing sector specifically, delivered superior industry-specific results.<\/p>\n \u201cAs a hedge fund manager, if I\u2019m aware of companies\u2019 earnings announcements, it\u2019s easier to forecast the future and I can take positions before earnings come out,\u201d said study co-author Mustafa Caglayan<\/a>, associate professor of finance<\/a> at FIU Business. \u201cIf I do it consistently, I end up with higher returns.\u201d<\/p>\n Investors can redeem those higher returns by investing in the best industry-timing hedge funds, he added.<\/p>\n Researchers examined 11,040 hedge funds across 12 industries – including telecommunications, retail, energy, business equipment, and durable as well as non-durable consumer products \u2013 testing if they had the ability to time industry-specific returns and whether this could predict the variation in future returns.<\/p>\n The manufacturing industry was consistently the top performer.<\/p>\n In addition to generating higher returns, the best manufacturing industry-timing hedge funds experience larger inflows of capital and as a result have a higher chance of survival in the following six- to 12-month period. These have the highest return sensitivity to earnings surprises, indicating that fund managers should pay close attention to earnings news in the sector.<\/p>\n \u201cIt\u2019s easier to forecast earnings surprises and business cycle indicators for companies in the industry because they are more likely to be persistently in the same earnings direction and maintain similar results over the following months,\u201d said Caglayan.<\/p>\n By contrast, researchers didn\u2019t find evidence of a positive link between manufacturing industry timing and mutual funds\u2019 future performance.<\/p>\n \u201cHedge funds can move quickly,\u201d said Caglayan. \u201cThey aren\u2019t heavily regulated, don\u2019t have concentration requirements and have more flexibility in their portfolio holdings and investment strategies, including the use of short-sell.\u201d<\/p>\n The paper was co-authored by Caglayan with Turan G. Bali, professor of business administration at McDonough School of Business, Georgetown University; Stephen J. Brown, professor of finance at New York University Stern School of Business; and Umut Celiker, assistant professor of finance of Virginia Tech.<\/p>\n","protected":false},"excerpt":{"rendered":" Hedge funds that time the market ahead of positive and negative news within the manufacturing industry outperform competitors, research from FIU Business finds. The study found that timing the market ahead of positive and negative news within specific industries, versus overall market timing, pays off for skilled hedge fund managers and, ultimately, their investors. The […]<\/p>\n","protected":false},"author":67,"featured_media":33005,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[4,10],"tags":[619,4519,4230,2229],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/32997"}],"collection":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/users\/67"}],"replies":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/comments?post=32997"}],"version-history":[{"count":7,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/32997\/revisions"}],"predecessor-version":[{"id":33027,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/32997\/revisions\/33027"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/media\/33005"}],"wp:attachment":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/media?parent=32997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/categories?post=32997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/tags?post=32997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Mustafa](\"https:\/\/biznews.fiu.edu\/wp-content\/uploads\/2019\/07\/Mustafa-Caglayan.jpg\" "\\"Mustafa")