When Measuring the Value of Hedge Funds, Don’t Forget Risk

Following the financial media’s reporting on hedge funds over the past few years, one could be mistaken for thinking that frustrating industry-wide returns – along with some high profile winning bets, frauds and serial insider trading – have dominated the industry. And yet money, particularly of the institutional variety, continues to flow towards these expensive dynamic investment vehicles. Indeed, a record amount of money ($2.317 trillion) is currently invested in hedge funds. Why? Well, it’s not just about returns.