Equity funds step up use of credit default swaps

Equity hedge funds have continued to increase their exposure to credit derivatives, according to research from Hennessee Group, an adviser to hedge fund investors. But Hennessee warns that those inexperienced in the market may be using derivatives in inappropriate ways.

“While there don't appear to be any imminent risks to the credit markets caused by hedge funds, we are concerned about the use of these instruments by funds that are not well-versed in how these markets trade and the dynamics of