Hedge Fund Risk Fundamentals: Solving the Risk Management and Transparency Challenge (Bloomberg Financial) [Hardcover]

"Hedge Fund Risk Fundamentals contains an abundance of helpful information for investors who want to understand the intricacies and risk dynamics of hedge funds. The book is written with commendable clarity and provides a valuable glimpse into the workings of a rapidly growing investment vehicle." (Financial Analysts Journal)

"A wonderfully written book on a topic that has vexed investors and professionals alike––balancing the need to know against the desire to provide information. In a thorough and comprehensive manner, Richard Horwitz takes the reader on an explanatory journey through the risks associated with hedge fund investing. His insight and experience give him the perspective needed to articulate the challenges faced by this industry, as well as offering a sound solution that I believe couldn′t come soon enough."
—Andrew A Kandiew
Managing Director, Risk Management
Commonfund

"Richard Horwitz has produced a work of exceptional practical value. This book deals head–on with the challenges of hedge fund investing by providing intelligent, well–informed, and uniquely accessible advice. Most usefully, he provides a benchmark for hedge fund investors to evaluate their own investment processes."
—Andrew B. Weisman
Director of Risk Management and Research, Strativarius Capital Management, LP

"Required reading for anyone who wishes to understand the fine points of hedge fund risk measurement."
—Steve McMenamin
Chairman, Greenwich Roundtable

"Not overly technical, this book is not only a must–read for neophytes and the newly indoctrinated to risk on derivatives but also a great refocuser for risk professionals!"
—Robert M. Aaron
Chairman and CEO, Derivatives Portfolio Management, LLC
Member of the Board, Managed Funds Association

"A comprehensive, eye–opening account on risk management which should be read by investors and managers alike."
—Lois Peltz
President and CEO, Infovest21

"This book offers an excellent review of the complex topic of hedge fund risk management. Furthermore, it provides an innovative and pragmatic solution to the key transparency issue."
—Pierre Jette, MBA, CFA
Associate Vice President, Equity Markets, CDP Capital

"Richard Horwitz provides a invigoratingly fresh and engaging perspective on hedge funds, risk management and investing principles. Practitioners all too often forget the basic principles of quantitative risk management, and thus obscure rather than illuminate the trade off between risk and reward. This book eloquently bridges the divide between the ′theory′ and the ′practice′ of investing in hedge funds."
—Adil Abdulali
Director of Risk Management, Protégé Partners

In the constantly evolving hedge fund marketplace, nothing is more central––but in many ways, more amorphous and elusive––than risk. Yet there remains no standard for analyzing and measuring risk within this highly secretive, largely unregulated field, leaving the thousands of hedge funds––and the tens of thousands of hedge fund investors––in dangerously dim light. The industry has not solved the "transparency" challenge––communicating risk to investors without disclosing proprietary information.

Hedge Fund Risk Fundamentals is the first book to bring these issues to the forefront. With clarity, concision, and minimal math, Richard Horwitz lays out the key components and the cutting–edge processes in the field of hedge fund risk management today. Against that backdrop, he presents a groundbreaking utility destined to set the standard for transparency and risk management within the hedge fund universe.

You’ll learn why, when it comes to risk management, 1 + 1 = 1.41. For all of those perplexed by the difficulties of assessing risk in hedge fund investing, Horwitz’s concepts make for an invaluable road map and a demystifying resource that hedge funds and investors at all levels will find indispensable.

Richard Horwitz is managing director of manager assessment and risk management of Merrill Lynch′s Hedge Fund Development and Management Group (HFDMG). He has implemented Risk Fundamentals, a proprietary risk transparency and management system. The system is risk factor based, permitting underlying funds to provide structural risk transparency without requiring position disclosure and for this transparency to be used to provide a fundamental understanding of each underlying fund and to construct risk–efficient portfolios of funds. Previously, Horwitz was senior vice president and director of risk management and investment analytics at Kenmar Global Investment Management Inc., a $2 billion fund of funds. He gained his fundamental knowledge of hedge funds as a principal at Capital Market Risk Advisors, Inc., the boutique risk management consulting firm. Horwitz had previously been a buy–side senior equity analyst at Sanford C. Bernstein & Co. and a consultant in financial services at Booz Allen Hamilton Inc. He earned an MS in management (Sloan School) and a BS in electrical engineering from the Massachusetts Institute of Technology. Horwitz has also written numerous articles on hedge funds.