Delicate Balance

Investors give hedge funds the freedom to try to make money in any market. Sometimes that leads to unwanted style drift.

Investing in hedge funds is all about managing risk. Investors must contend with everything from lockups and other restrictions on removing money quickly to instances of fraudulent management.

Although hedge fund frauds make for sensational headlines -- witness the recent travails of investors in Bayou Management and Wood River Capital Management -- they are in fact rare.

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