Do hedge funds improve markets?

matthew lynn

With the recent explosion in hedge funds (there are now more than 7,000 of them, controlling almost $900bn in assets), there is no hotter issue in global finance.

To some, hedge funds are reckless gamblers, using obscure financial instruments to blow apart currencies and stocks, pushing up prices and creating speculative bubbles.

To others, they are benign new pools of capital that help investors by spreading their risk, and which stabilise the market by taking up contrary positions.

Who is right

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