Everything is good to diversify portfolios

Correction of excess or excess of correction The brutality of the movements on the stock market in recent months a surprise and revealed to the public the weight of these new actors in the financial markets are hedge funds, the famous "hedge funds". Their entry in the financial arena these past years resurrected the spectre of systemic risk in other forms than the old banking panics.

Rising oil and raw materials prices completed producing countries funds, causing around and real bubbles. A tank of savings by the enrichment of the South, the ageing of the North and four years of accommodative monetary policies since the collapse of the dot-com bubble also accustomed investors to cheap credit. What's more tempting, once the heyday of growth income, than to borrow heavily to make investments to high risk, but also more efficient Raw materials, oil, foreign currency, stock market, the bond market, real estate and even the volatility... Everything is good to "diversify" portfolios.

The world of "hedge funds" is difficult to identify precisely and for good reason: not regulated, it is opaque in its policies and operating rules, and knows virtually no regulatory constraint on publications, positions or results. Fall into this category funds that implement investment strategies often complex and therefore risky. Having free rein, they present themselves as alternatives to traditional investment strategies and thus disparate trends of markets. It is estimated the funds under management more than 1.500 billion (compared with 50 billion in 1990). Their impact on the markets would be at least ten times with important lever available to them via products, positions vendors in the open (so-called "short") and the range always more extensive produce so-called "structured". They now have a major, even predominant, impact on certain markets in the contribution of the funds, risk taking and the rate of reaction (strong rotation of portfolios). Thus they accounted for more than half of the daily orders passed to the New York Stock Exchange in 2004.

If "hedge funds" lead the game, which is the risk Because that says taken said in the open position when the winding-up fast, mass market, and one is tempted to add indiscriminately. In this context, can question the reality of diversification strategies which claim these funds as to the extent of the risk actually incurred by the final investors. Are "hedge funds" only fuel speculation The high specialization of these funds after specific investment styles provide superior to conventional portfolios and outstanding performance. But default major (as in 1998 when the Russian crisis), the forced liquidation is necessary at all and can disseminate panic.

The success of "hedge funds" are that they are no longer limited to a few privileged and knowledgeable professionals. Pension funds, traditional management outsource them an increasing share of their collections. "hedge funds" have also a close relationship with creditor banks. The time savers and creditors are exposed to risks which asked if they appreciate properly the scope.

The meteoric rise of "hedge funds" in recent years could be a response to the needs to increase the performance of saving funds face the decline of the yields of many markets. But became too many, too, they generate complex risks that it is difficult to apprehend. Palette of products, the diversification of positions while immunize actors of the financial market against the risk of contagion in particular default. Their donors are not immune to major credit risk and therefore a reaction chain devastating. The "purge" of spring sounds like an alert.