From a former pension-concerned Xeroid colleague, this definition of a hedge fund found within the Ownership Profile of the Investor Relations section of the Xerox website:

Hedge Fund Definition

Hedge Fund investors have the majority of their funds invested in some sort of market neutral strategy. Notably, the term 'hedge fund' is both a legal structure (as opposed to a mutual fund) and an investment style. Nearly every firm that uses a hedge fund or market neutral style is legally organized as a hedge fund (and thus only open to accredited investors). Many are offshore funds that are unregistered, have no investment limitations, and are not subject to disclosure regulations. The common element is that any long position taken in a specific equity is offset by a short position in either a merger partner (risk arbitrage), an 'overvalued' member of the same sector (long/short paired trading), a convertible bond (convertible arbitrage), a futures contract (index arbitrage) or an option contract (volatility arbitrage). Because of the idiosyncratic nature of these investors, the fundamentals of their portfolios are not indicative of their investment styles. Thomson Financial categorizes these portfolios based on its specific knowledge of the their historical investment behavior.

Are you confident your pension trustees' / managers' holdings in certain “legally structured" hedge funds are deployed as described above? Apparently those investing with Amaranth were.

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