Risk
Because investments in hedge funds can add diversification to investment portfolios, investors may use them as a tool to reduce their overall portfolio risk exposures. Managers of hedge funds use particular trading strategies and instruments with the specific aim of reducing market risks to produce risk-adjusted returns, which are consistent with investors' desired level of risk. Hedge funds ideally produce returns relatively uncorrelated with market indices. While "hedging" can be a way of reducing the risk of an investment, hedge funds, like all other investment types, are not immune to risk. According to a report by the Hennessee Group, hedge funds were approximately one-third less volatile than the S&P 500 between 1993 and 2010.
Read more about this topic: Hedge Funds
Famous quotes containing the word risk:
“Do you want me to tell you something really subversive? Love is everything its cracked up to be. Thats why people are so cynical about it.... It really is worth fighting for, being brave for, risking everything for. And the trouble is, if you dont risk anything, you risk even more.”
—Erica Jong (b. 1942)
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—Zora Neale Hurston (18911960)
“The risk for a woman who considers her helpless children her job is that the childrens growth toward self-sufficiency may be experienced as a refutation of the mothers indispensability, and she may unconsciously sabotage their growth as a result.”
—Letty Cottin Pogrebin (20th century)