The Germany Hedge Fund-Award aims to reward outstanding achievement in the area of Hedge Fund management. Differently to other comparable international award events, the fund universe isn’t limited to the domiciliation of the Hedge Fund, but rather takes into consideration all Hedge Fund products that can be acquired by national institutional investors. The winner is not identified by a process where a committee suggests the funds and they are then judged by a jury, as in many other awards, but rather each fund is considered through an evaluation process.

The selection of the relevant performance indicators to assess the Hedge Funds is measured by the IBC. The challenge is to make the assessment criteria as objective and comprehensible as possible, but at the same time to take into account the specifics of Hedge Funds. Traditional risk indicators assume normally distributed periodic returns. This cannot be confirmed empirically for Hedge Funds. In a mean-variance approach this can lead to an underestimation of the probability of higher losses and estimation of return potential. Following these considerations, the IBC has selected the Adjusted Sharp Ratio (Mahdavi 2004) as the most important performance identification method in the assessment of Hedge Funds in the scope of the awards. This identification method takes into consideration the non normal distribution of Hedge Fund returns and calculates on the basis of auto-correlated returns. Other important assessment criteria are the correlation to other asset classes as well as various downside risk indicators.

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