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:
“Every day, in this mostly male world, you have to figure out, Do I get this by charming somebody? By being strong? Or by totally allowing my aggression out? Youve got to risk failure. The minute you want to keep poweryouve become subservient, somebody who does work you dont believe in.”
—Paula Weinstein (b. 1945)
“It is not a piece of fine feminine Spitalfields silkbut is of the horrible texture of a fabric that should be woven of ships cables & hausers. A Polar wind blows through it, & birds of prey hover over it. Warn all gentle fastidious people from so much as peeping into the bookon risk of a lumbago & sciatics.”
—Herman Melville (18191891)
“If the only new thing we have to offer is an improved version of the past, then today can only be inferior to yesterday. Hypnotised by images of the past, we risk losing all capacity for creative change.”
—Robert Hewison (b. 1943)