MFA Blog

OFR Official Says Hedge Funds Not as Risky as Conventionally Thought

Posted on December 17, 2013

Hedge funds pose less risk than conventionally thought, according to a preliminary analysis of new hedge fund data.  Richard Berner, Director of the U.S. Treasury Department’s Office of Financial Research (OFR), announced the tentative conclusion yesterday.

The findings are based on “an examination of hedge funds’ leverage levels, risk modeling, and the amount of hard-to-value assets,” as well as other factors, according to a report from Reuters.  OFR has access to new data from thousands of hedge funds due to a Dodd-Frank Act provision that required certain large funds to submit confidential data to regulators.

“While these results are very preliminary, they seem to contradict the idea that hedge funds typically employ risky strategies,” said Berner.

Richard H. Baker, MFA’s President and Chief Executive Officer, responded to the data.  “We appreciate the OFR’s analysis of the … data, which largely confirms the history of data on hedge fund strategies and their use of leverage, and tracks with MFA’s view that hedge funds currently do not pose a systemic risk,” he told Reuters.

Read more about OFR’s findings online from Reuters.