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View Diary: A serious protest, Oregon sues Oppenheimer (13 comments)

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  •  IIRC, it goes back to "portfolio theory." (3+ / 0-)
    Recommended by:
    Cliss, jamess, FarWestGirl

    Under portfolio, one wants to have a well-balanced portfolio of investments: if one sector goes up, another goes down.  Similarly, the risk factors are balanced: a certain portion should be in low-risk assets like bonds or cash, and a certain portion should be in higher-risk assets like hedge funds.  

    Given that, it's very common for exempt organizations to be pretty heavily invested in high-risk investments like hedge funds and the like.  

    Check out big not-for-profits like Harvard or the Gates Foundation, and they've got substantial hedge fund holdings.

    We are building a team that is continuously being built. - Sarah Palin

    by burrow owl on Tue Apr 14, 2009 at 06:45:10 PM PDT

    [ Parent ]

    •  Partly true (0+ / 0-)

      Hedge funds were marketed as diversifiers because they were SUPPOSED to move differently from other asset classes.  However, as of early 2008 they were showing a positive correlation with said other classes (ie, they weren't really as independent as advertised), which is why  significant outflows from hedges occurred...  I don't know what has happened since early 2008, so perhaps this has changed.

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