Posted by onetwo , Jun 06, 2008 11:27AM

I'm tired of f-ing uninformed reporters calling hedge funds "risky". Yes, there is idiosyncratic risk--which is what everyone focuses on, the big blow ups--but, by definition, hedge funds are very safe. Take a look at the GS ART index, which, simply put, attempts to mirror the industry's trades using regression derived betas. The index has an SD of 6%, which is 1/3 the SPX and about 200bps above Lehman Agg. Hedge Funds are not risky--poorly run hedge funds are. But the same risk lies in individual stocks--especially small caps--but we dont deride stocks as "risky" because as a market they aren't very "risky". That, of course, doesn't mean individual companies aren't risky--that's the aforementioned idiosyncratic risk.