(Yahoo Finance)Following the 2008 global financial crisis, normal investors who had lost money investing in traditional funds developed an appetite for vehicles whose performance was agnostic to market conditions. This helped absolute-return funds and long-short equity funds attract deposits from investors. In the six years leading to 2014, such strategies attracted more than $250 billion.
However, these investment vehicles also tend to use riskier instruments such as derivatives and other illiquid assets. The bountiful cash invested in these vehicles by clients invited regulatory scrutiny into the transparency of these instruments, as well as their compliance with liquidity and leverage rules.
