By John Collett Hedge funds have been around for 50 years and are popular with well-heeled individuals, US university endowment funds and more recently, US pension funds.
Ordinary investors tend to shy away because their operations are shrouded in secrecy.
The image of hedge funds has not been helped by the fall from grace of funds run by George Soros and Julian Robertson. And then there was Long Term Capital Management, which a little more than two years ago took on more debt until it had borrowed more than 100 times its capital. The Asian crises wrong-footed the manager and it was bailed out on orders from the US Federal Reserve, which was fearful of the consequences for the US economy if it went under. Mr Doupe says most hedge funds are now more conservative, with most borrowing no more than they have in funds under management. He says a whole industry should not be tarred because of a couple of one-off events.