Evil porpoises make analyzing alternative investment more difficult than it should be, said Thomas Schneeweis, a director of the Center for International Securities and Derivatives Markets, professor at the University of Massachusetts, and a partner in alternative money management consulting firm TRS Associates LP, all in Amherst, Mass.
Everybody hears about the porpoise that pushes a drowning swimmer to safety, saving a life, Mr. Schneeweis said.
But "you never hear about the ones that push people away from shore."
The porpoises that drown people by pushing them the wrong way are like investment managers that go out of business and are never heard from again, often called survivorship bias.
The resulting performance numbers look better because some of the bad returns have been dropped out.
While the problem exists among all kinds of managers, it is more acute for the alternative world, he said. "Everybody's database is missing somebody," he said.
As a result, the CISDM has constructed a commodity futures trading advisers data set that includes defunct managers, and is working on creating one for hedge fund managers, all for academic purposes, he said.
For competitive reasons, hedge fund database managers are reticent to share the data, but might be willing to do so once it becomes more than a year old, he said.