A new piece of academic research that compares hedge funds with institutional investors has found that the common conception of hedge funds as being prone to exacerbating market problems may not be accurate.

The independent paper, entitled "Hedge Fund Herding and Crowded Trades: The Apologists' Evidence", written by academics in the finance departments of at three US universities, claims to be the first direct long-term comparison between hedge funds and other institutional investors. Its authors conclude that "hedge funds make markets more efficient and, as a result contribute to the efficient allocation of resources in the real economy."