The new orthodoxy

Despite becoming more mainstream in recent years, hedge funds remain the most secretive of investors. In general, knowledge of their activities has increased, but details about hedge funds’ increased use of credit derivatives has been lacking, until now. In Risk’s first Hedge Funds special report, we describe in unprecedented detail what products hedge funds are using and how their evolving strategies are forcing dealers to rethink existing coverage models ( view article ).

One of the drivers of the hedge fund industry’s growth is increased interest from outside its traditional investor base of wealthy individuals. Just over a decade ago, the public perception of hedge funds as huge gambling machines that threaten financial stability was created. This was in the aftermath of sterling’s dramatic exit from the European exchange rate mechanism on the back of what was reportedly a $10 billion short sterling position put on by George Soros’ Quantum Funds. Subsequent