Letters

From Robert Macrae of Arcus Investment

Under Fire: Do Hedge Funds Cause Volatility?

Commentators often assert that hedge funds cause volatility, but a simple thought experiment suggests that this is unlikely.

Imagine a traded security that has unpredictable returns, with the exception that we are a major trader and can transact sufficient volume to move prices in the short term. How should we trade in order to make returns as volatile as possible?

The best we can do is to buy and sell it in short

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: