Investors seek tail risk funds to cover 'black swan' events

Fear of extreme events has spawned a number of dedicated tail risk funds since the global financial crisis. Credit examines what the current major risks are and whether institutional investors need to employ specialist funds to hedge them.

John D. Rockefeller once said he tried to turn every disaster into an opportunity. Today, it would seem, everyone is trying their hand. Tail risk is the talk of the markets and increasing numbers of funds are offering ways to hedge against the bleakest scenarios imaginable. With the recent global financial crisis still fresh in the memory – indeed, some commentators would argue it has not yet fully played out – investors are taking more care than usual to insure themselves against losses.

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