backfill bias vs selection bias

[passcfaforsure]

Please add some comment about the difference between ” backfill bias vs selection bias” thanks

 

[WayneINTJ]

I believe such biases refer to hedge fund indexes. Selection bias: usually only hedge funds that are performing well will voluntarily choose to publicly disclose their results. Backfill bias: If a hedge fund starts publicly disclosing their results today, their performance for the past few years will also be added to the hedge fund index.
So, if you look at a hedge fund index, the returns you see will be much higher than what the average hedge fund will earn because the poor performers are not reporting.

 

[Dreary]

+1

 

[mildeng]

If I recall correctly, such biases do not apply to FoF structures, only to indices as Wayne stated.

 

[WayneINTJ]

Oh fo sho. Fund of funds don’t exhibit such biases.