Money – The lure of high returns that aren’t correlated to other markets has led to an explosion of global hedge fund money, to more than US$2 trillion. Unfortunately, “explosion” also describes a number of hedge funds that literally blew up over the years due to fraud or poor risk controls.
Hedge funds are typically managed offshore, outside the jurisdiction of local regulators. The funds use wide-ranging investing styles and ask for maximum flexibility from investors on the ways they can use their money. The managers of these often obscure, boutique funds move capital quickly from trade to trade, into many different accounts.
